Here's To The Numbers

We are nearly a fortnight into our cash crackdown and at the end of this month we will embark on the biggest challenge possible for a couple who have no financial sensibilities whatsoever.

So I thought I would try and explain (maybe rather poorly) where the theory comes from.
If you had a £200,000 repayment mortgage over 25 years, which is a bit more than we have but will do for the purpose of illustration, by paying off an extra £150 per month or £5 per day (packet of fags, bottle of reasonable wine) you will magically save over £40,000 in interest and reduce your mortgage by almost 5 years. I will comment here that I'm not entirely sure what exact interest rate is used to calculate this but the idea is that the more cash you pay off the less interest you will incurring as the debt is reducing more rapidly.

If you paid off an extra £400 per month (£15 per day) you would save around £7o,000 in interest payments and reduce your mortgage by nearly ten years.

So, the next stage is to go more extreme, we could have opted for the suggestions of paying the mortgage off in 2 years but I think you must have to be earning one heck of a lot and be spending a lot too, so we reckon on five years, though this is where it may all go pear shaped, we doubled the £400 to £800 and the £15 to £30 and hey presto we are off.

The final hurdle that needs overcoming is the fact that our over-payments each month are limited to £500 so if this craziness actually works out then we may have to do some mortgage re-jigging at the next review and in the meantime any extra dosh can go towards those cheeky credit card and student loan companies.

Anyone who has genuine maths ability (or who is employed as a mortgage advisor) please feel free to correct me, though in a gentle way please so you don't dash my hopes and dreams. Tomorrow I shall be back to anecdotal ramblings and hopefully steering clear of the maths for a while but thank-you for your patience.