Offsetting My Worries (I hope!)

A question about : Offsetting My Worries (I hope!)

Hey Everyone

It is really encouraging to read how others are progressing with paying off their mortgage, & good to know that there are people out there taking responsibility for their financial decisions too. I find MSE is a great inspiration particularly at times of temptation or despondency (plenty of that about at the moment!), so at the risk of being a mortgage bore I thought I'd share my efforts and plans.

As first time buyers my partner, Andy, and I got our first mortgage (a 7 year 5.69% fixed rate mortgage with Northern Rock) in 2001. We wanted the certainty of a fix but checked the small print to make sure there were no penalties for overpayment. After a couple of years we started making regular overpayments and in the last 18 months have really ramped up the overpayments to the point where we have been overpaying by a whopping 150% each month! So far we've overpaid by Ј25000 and based on a projection of continued overpayments would be mortgage free by March 2013 (originally 2026), saving Ј67000!

Our fixed rate with Northern Rock expires in Feb 09 and with 60% equity in the house we've decided to opt for a First Direct offset mortgage which tracks the Bank of England base rate +0.79% for the term of the mortgage. We've seen first hand what overpayments can do to your loan period and interest payable and can't wait to offset our savings but still have them easily accessible for emergencies. There are no redemption penalties, arrangement, booking, legal or valuation fees to pay and all being well we hope to be on target to pay off the mortgage by 2013.

We then plan to do save up a few quid and take sabbaticals or quit our jobs and do some well earned travelling around the world for 3 months.

GOOD LUCK TO EVERYONE ELSE OUT THERE TRYING TO GET THE MAN OFF THEIR BACK.

Claire

Starting Mortgage: Ј149,000 Nov 2001
Current Mortgage: Ј99,568 Oct 2008
Mortgage Free Target Date: March 2013

Best answers:

• Basics plan look good.
  I would put some cash ISAs into the plan as well, the long term benifits of tax free is worth having.
• Sounds a great plan. You've started well I hope it carries on as well.
• Hey! Sounds like you're on a roll! Well done - keep up the good work...I'll look forward to reading your diary.
• Hello, welcome, and the very best of luck!
• Thanks v much for the votes of confidence and to getmoreforless. I'm putting most of my extra money into offsetting the mortaging but I'm making sure I put a little bit of money into a cash mini isa for a rainy day.
• Hi,
  We've just applied for (and been offered) the very same mortgage as you. I'm actually getting quite excited about it going live in late Jan 09 and seeing what offsetting will do.
  With the base rate cut last week we've already saved since our application went in, so we're particularly pleased as our current mortgage provider (we're fixed at the moment too) hasn't dropped their rates yet.
  Come next year we're going to be pretty focused on overpayments/offsetting, and I'm already starting to contact my direct debit companies to change the payment from the beginning to the end of the month so our money stays in the account as long as possible.
  Good luck
  TT xx
• I think tracker mortgages are a great idea. I got a offset fee-free 0.50%+BOE remortgage with the Newcastle about 18 months ago and it's worked out well. I just hope the base rate continues to fall.
• Welcome & good Luck
• Thanks for all the advice, comments and encouragement.
  Yay! Offer contract came through earlier this week. Its a good point raised by Gallygirl on precisely what rate is tracked. Our new mortgage definitely tracks based on BOE and the contract specifically states that changes to the BOE rate will be passed on "immediately."
  Treacletoes, from looking at the First Direct website I think this mortgage rate has now been withdrawn from the market so well done to us for getting in there early! FD also texted us to let us know our "drive by" valuation would be taking place within the next week. We've got well over the equity % requied by the lender but with houses prices falling the whole time I'll be glad when they've done the valuation. Certainly glad we didn't wait til the New Year.
  Incidentally I was looking at the website of the lender we are currently with - Northern Rock - and their current remortgage rates (only available to new customers). Clearly they are trying to reduce their books but some of their rates are insulting! It would seem to me that you'd be a total loon to take some of their "deals" ... unless I'm missing something! In some cases the fixed period rate is actually more than the SVR! I've pasted in some of their "offers" below. Somebody tell I'm not going mad!
  ProductFixedInitial RateFollowed by our Standard Variable Rate, currentlyOverall cost for comparisonMax Loan To ValueProduct FeeEarly Repayment Charge2 Year Flexi Fixed01-Dec7.69%7.34%7.60% APR90%Ј9954% until201001-Dec-102 Year Flexi Fixed01-Dec8.14%7.34%7.60% APR90%Ј04% until201001-Dec-10
• Whoops this came out a bit garbled - sorry. Go to https://www.northernrock.co.uk/mortga...s/residential/ for the rate info. Claire
• I hang my head in shame...I've not been quite as dedicated to keeping my thread up to date (to say the least) and I know that this site is only as good as the posters (not the lurkers) on it. Sorry for that - I will try to check in at least every month on this thread . Rest assured I am not applying this lacksadaisical (sp!?) attitude to paying off the mortage. Me and OH have set ourselves quite high targets & we are part of the 2009 MF Wannabe's thread kindly organised and brilliantly executed by the zealous Zavarony.
  On 2009 MF Wannabe we've an OP target for the year at Ј22,200 and have paid Ј5,150 so far, with April still to go through and be posted. Had a bit of a bumpy start with some extra costs coming out plus a remortgage that went through in February which has skewed things slightly. However, we are back on track paying Ј2,150 in overpayments each month so if we can keep to that we'll come in at Ј24,500 by the end of the year, which will be great. Overall we hope to have totally offset our mortgage by May 2011 (which will essentially mean we'll pay off the mortgage - we have emergency savings held separately in an ISA - so it won't strip us of all our savings). OH will be 40 (and also my hubby by then!) and I'll be 34 (and also his wifey!)
  HOWEVER ... the reason I've not been posting much because there isn't really much to report, and I can't think anyone would be interested in what is quite a mundane, MF obsessed life!! Both of us totally believe in what we are doing but I, in particular (!), am finding it a bit of a slog. Deferred gratification etc is all well and good, and I'm not much of a consumerl, and don't need the buzz of buying things but there I am feeling a sense of deprivation from time to time. I keep telling myself (as does my OH!) that we should be really grateful for what we are able to do & I should not feel like this. While neither of us are on massive salaries (we're just exceptionally careful with our money) I also appreciate that there are very few people who can do what we are doing, and while we don't do without the basics, we do make relative sacrifices. I keep thinking fast forward 2 years and we'll be there (and we've listed a variety of options to consider when the MF date comes) then I think, hang on, that's 2 years of my life - that's not right, and we could have such adventures with the money we are offsetting. But then we're getting married at the end of this year and that is something to look forward to, and we'll have a nice honeymoon courtesy of M-I-L next year so maybe I'm just an occasional doom-mongerer (let's face it, it's hard to be otherwise given "current climate" and the media's role in propagating fear about jobs, houses and everything else.)
  I guess just paying the mortgage off has got to be about something bigger for me. What can it mean, what will it mean for us? A lifestyle change? Or will it just be enough to be "debt-free" and carry on as is? When we started all this it was about buying another house in area we want to be, doing the things we want to do and having a passive income from our current house to help supplement things. One of things we've always dreamt about is a little cottage, nothing pricey, in the Lake District (one with a dry stone wall in the garden for our two cats to sit on mind!) and an outdoorsy job, ideally working for National Trust or similar. I'm currently in marketing for a law firm in South East but, as long as the figures add up, I'm not bothered about having a "well paid" job but rather one that I enjoy (I keep trying to explain to OH that other than wanting another house in the Lakes I'm quite maintenance free!) OH feels similarly about his job (software engineer in IT) and doesn't mind a bit of a commute if he can offset it with some home working too. We'd also both is also happy to do a bit of project work / contracting as we are specialists in our roles for periods of time. BUT prices in the Lakes are high and we may need our jobs in the South to afford a place up there, plus we'll need time to save up a decent deposit...
  My mantra is "don't stop dreaming but remember to be content with what you have in life" but sometimes it is hard. Any wisdom from you MFWers warmly received and hope you don't judge me too harsly!
• blimey, sorry for the lengthy post. for those of you who persevere with it, thanks! :-)
  will also update sig tonight
• Hi... from somone else avoiding her diary
  Well done!
  Make sure you have some "mad money" in your budget that you can blow on something you want but don't need - you still need to enjoy your life and lifestyle while trying to to become MF! I don't necessarily actually spend it (and when I do I still try to get a good deal on it ) but it feels good to know its there and I can spend it if I wanted too without blowing the budget!
  I do things like surveys and this pot of money (or if I get vouchers I add the equivalent Ј when I use the vouchers) is my splurge fund! In the 6 months I bought a new MP3 player (old one was really annoying me as the lock was tempremental and the memory was tiny) and a gift set of my fave perfume. I have ~Ј120 (+ ~Ј40 of vouchers still to use and transfer equivalent) at the mo I think. I'd quite like a netbook but really can't justify buying one as I really don't NEED it so this may be what it's next used for (once I have a bit more lol!)
  Good luck with the all wedding/honeymoon plans!
• Thanks so much Taka. Really need a rally!
  I guess I'm really taking the "do I need it" question to the extremes. I mean, in the grand scheme of things I really need for nothing, What really gets to me is that the stuff I really want is the more expensive stuff (always the way huh!) I have questioned buying magazines and can do perfectly well without. However sometimes I'm sat at home and look at the textured ceiling or increasingly bare carpet (mainly thanks to Bruce and Maggie our little cat monsters) and think "well what I really want is not that £3.50 magazine but the £350 carpet (when did I become my mum!) For example, the kitchen could do with replacing. It is serviceable but no matter how much I clean it, of late it still seems to be old and grubby (no I dont have OCD, honest!) I've even researched and identified the IKEA kitchen I like, measured, planned and priced it but the whole MFW stops me from going any further! I see it like this: we have the savings but if we use them we add a couple of months to the life of the mortgage. If we wait til the mortgage is paid off, save for two months et voila we have money for the kitchen, and no debt. The MF date means a lot to me and I don't want to do anything to push it further away. Having said that when we come to let the house a new kichen will be needed (and if we can get some benefit from it in the meantime all the better). I've made an agreement with myself (!) and OH that we don't replace the kitchen before MF date unless the oven packs in. If it does I'll be beating a path to IKEA- land!
  I think in all seriousness though it might be worth have a separate pot of "mad money." I liked the idea on your thread about having a separately named renovation fund so you don't feel like a complete criminal if you dig in for something that you want to do round the house! Will have a chat with OH.
  Thanks for asking about the wedding - going very well. We got engaged nearly 2 years ago, although we met 14 years ago at Lancaster University. My OH planned a surprise trip to NY and proposed to me in NY on my 30th birthday. (I know, I know -not such a boring mundane life after all - at least back then prior to getting into this OP lark so heavily) Was lovely but we got a bit put off setting a date. Both our work places have been busy and hasslesome plus we didn't really know what we wanted and felt quite a bit of pressure from certain quarters to do this, have that etc. Fortunately for me I have THE most wonderful little sister who has been brilliant. Now we have planned a small wedding, meal and Wii party at a hotel in Grasmere, Lake District, for family (only 12 of us!) Everything is booked and we gave notice on tuesday - grinning our way through it. Am getting quite excited now we have discovered what we want. My little sister has been a complete gem - she knows exactly what I want, even before I do and has basically taken on the role of wedding planner. Am v lucky as I'm not really into all that stuff. Minimum fuss for me. It is about a marriage, not a wedding, for us. If it meant more to us we'd have tied the knot ages ago!
  So why are you avoiding your diary - anything I can help with?
• well done on those ops
• Thanks SMF - it is good isn't it! We'd already OP'd Ј35k on our previous (and first) mortgage but when we remortgaged we chose to let our new mortgage swallow that up to allow us access to better rates / deals. So we know we can stick at the OPs and turn them to our advantage. Just need some encouragement at the moment!