If you'd like to find out more about why we're overpaying our mortgage, the post is here!

July turned out to be a fantastic month for overpaying. It wasn't a record breaking month, that's still held by April. But it was still very good and it's all thanks to my expenses claim, my train ticket to a work conference gave an enormous boost to the payment pot!

So without further ado our overpayment for July was £129.27!!

That was made up of our standard £30, which we budget every month. I received £5.39 from Quidco, which was cashback from buying some house items a few months ago, and then £78.66 was my work expenses claim. I also did a couple of account sweeps, rounding my bank balance down to end in a 5 or a 0, and that netted me an extra £5.56, and then I finally rounded down the mortgage balance at the end of the month to pay off an extra £7.66. 

Since we're now just over halfway through the year, I thought I'd take a little look at the impact our mortgage payments, and the overpayments, have had on some of the numbers!

When we started the mortgage we were having £12.01 added in interest per day! It's now down to £11.82 a day. We were due to go under £11 a day in August 2020, but we've now brought that up to June 2020, and of course that will go down as we continue to overpay. We were due to drop under £155k owed in May 2018, that's now fallen to March 2018. I really want to do it before January, but playing with numbers suggests that that might be a little tricky. I'm really happy with how close we're getting though, it's good motivation for the future.

I have a terramundi pot, which I started to save in when I was living in London. I only add £2 and 50 pence coins to it, and it's starting to get a little heavy. But it's certainly nowhere near full ,so I'm now debating if I want to crack it open in December and use whatever's in it to make one last huge overpayment for the New Year. But on the other hand I'd like to know how much it can hold when it's full, so I should hold out.

We'll see what the coming months bring, and see how many more £2 coins I can stuff in to it in the meantime XD

Why we're overpaying our mortgage

You may have noticed from some of my posts that since buying our first home back in December, me and my husband have been overpaying our mortgage. We deliberately built a £30 monthly overpayment in to our budget when we were originally planning a mortgage, and this is then topped up by cashback from Quidco, counting up money from penny jars, setting aside my expenses from work, or selling stuff we don’t use or need on eBay. My aim is to be able to double that £30 every month, and so far I’ve managed to hit that target consistently!

Telling people we’re overpaying generally leads to them going “Oh that’s a good idea!” followed by a pause and then “…but why when interest rates are so low?” It’s a good question, I certainly don’t know anyone offline that’s doing this as regularly, but it’s something we were both keen on doing for a variety of reasons.

1. We both hate debt

I still have a student loan, because like many students who graduated in 2008 I found it very difficult to get a well-paid job straight off the bat. Instead I found myself as the proud owner of two degrees and a job as a cashier in a supermarket, followed by various part-time contracts and an attempt at self-employment until I landed my first full-time role at the age of 24. But I don’t like being in debt, and neither does my husband. Having a debt of £160,000 is quite scary when you think about it, and given the uncertainty in the economy (especially with Brexit) we’d like to pay off extra while we can, before interest rates start going up!

2. Reducing the LTV

We found it difficult to get a mortgage in the first place because my current role is a contract. Admittedly at two years and with guaranteed full-time work it’s better than a zero-hours role, but it’s technically temporary nonetheless. We had a decent deposit saved up by my OH, which gave us an LTV of 85% (LTV is Loan to Value ratio, so how much you’re borrowing compared to the value of the house. We had a 15% deposit, so our LTV was 85%). This really helped us get a good mortgage rate despite my contract situation, and taught us a valuable lesson about how important a decent deposit can be. We have a 5 year fixed rate, by the time we’re due to re-mortgage I’ll probably have a stint of maternity leave which will have affected my earning potential, and given the risks to the economy we suspect that rules about mortgages will be significantly tighter. So reducing our LTV will hopefully help us in the long run, and might also make it easier to move up a step on the ladder when the time comes for us to find a bigger house.

3. It’s seriously addictive

I have a spread sheet that tracks, among other things, the daily amount of interest earned, the total amount we’ve paid per month, and the amount we owe to the bank. It’s set up for the next 5 years with our standard monthly payment, and then I can type in how much we’ve overpaid in a particular month and it will recalculate everything. I’m not going to lie, it’s really addictive. As soon as I send my expenses form in to work I make a note of the total, then when I go home I type it in to the spread sheet to see the effect. Same with filling up a bag of change, or getting a notification from Quidco that we can cashout.

The effect so far has only encouraged me to keep going. When we first got our mortgage we were earning £12.01 a day in interest. We would have hit £155,000 owed in May 2018, and would have dropped under £150,000 in September 2019. You'd think that we would need to be overpaying hundreds of pounds every month to make a difference.

So far (it’s only May after all, and we made our first overpayment in January) we’ve overpaid by £490.88. We’re now due to fall under the £155k mark in February 2018 (although my aim is to hit it by December), and will be below £150k in July 2018. Our daily interest rate is currently £11.88 (still a huge amount per day I know!), and will fall below £11.50 a day in October 2018.

It just goes to show that you don’t need thousands in the bank to pay off your mortgage, just small regular payments can make a big difference!

What to do on completion day!

If you’re buying a house then completion day is the most exciting part of the entire process. This is the day when you officially become the owner of the house and get your keys! You can start painting, move your furniture in, and start planning exactly how you want it. But there's a few things you should be prepared to sort out first…

Get the locks changed

How many people did your vendors give their keys to? Both sets of parents so there were plenty of spares available? The decorator who painted the hallway 3 years ago? A lodger that stayed for three months, and their replacement? There could be a dozen copies of your front door, back door, shed padlock and garage keys scattered around, and you have no idea who has them.

Therefore when it comes to completion day you should make sure you have the phone number of a local locksmith who can come round and change the locks for you. I phoned someone who was able to come out for “emergencies”, but I had to wait 2 hours before he could get there. Since this was our first time buying I had no idea what time completion would be sorted by, otherwise I would have booked someone to come out for a specific time.

If you know you can get to the house quite quickly, and you know you’ll have completed by early afternoon, then you can phone around and book for the locks to be changed later that day. We paid around £150 for two locks to be changed, which from what I’d read elsewhere is pretty average in terms of cost, and was well worth it for peace of mind.

Read your meters

Before you start firing up the boiler and switching on all the lights, take meter readings. The main two are gas and electricity, but if your new home has a water meter (they’re becoming increasingly common) then you’ll need to check that as well. The quickest, easiest way to do this is to get your phone out and take a couple of snaps of the meters. That way you have a visible record of the numbers, and you can submit the readings a few days later without feeling like you need to rush.

Your property information form from the vendors should state who the current provider is. You can then phone them, submit the readings, and then you have the option to change supplier over the coming weeks. Our vendors were landlords who’d held the place at arm’s length, so our form didn’t indicate who the energy provider was. “Luckily” for us there was a pile of post waiting on the doorstep, including a collection of demands relating to an unpaid bill from the energy provider, so we instantly knew who to contact with our readings. If you don't know, and don't have an unpaid bill waiting for you, there are phone numbers online that you can call to find out who the supplier is.

Be prepared to clean

Even if your vendors are lovely people and you’ve developed a decent rapport with them, chances are you’ll still want to clean the place when you get in. This could be giving the bathroom a scrub, wiping round the kitchen before you set up the kettle, or running around with a hoover. In our case the house clearance people our vendors had hired had decided to dismantle a wardrobe in the master bedroom, and had left thousands of fragments of MDF scattered across the carpet.

You should also be prepared to clean simply because your vendors don't HAVE to clean before they hand the keys over. As long as they don't cause damage to the house (for example, smashing all the windows or knocking chunks of plaster out of all the walls) you can't legally demand that they leave the place spotless. They'll be in a rush to get to their new place, just as you're in a rush to get in. Make yourself a box of essential cleaning products (washing up liquid, Dettol, toilet cleaner, sponges, cloths and Marigolds) to keep in the car, along with your hoover if you have space. Then if the place isn't quite how you'd like it you have all the things you need on hand and easily accessible.

We hoovered up the MDF fragments. After we'd picked up 12 screws and 5 nails.

Celebrate!

This is the most important part! Get a takeaway and pop open the bubbly, or put the kettle one. You’re in, the house is yours, and you can start doing all that decorating you’ve been planning for the past few months!