Overpayment or save spare cash

Consider a mini-cash ISA. The limit you can save is £3K a year. The interest is tax free.
It would be unfair to ask your partner to pay more towards the mortgage when they could not or it would cause financial or other stress. Small regular payments do build up into something substantial in the end. Increased equity in the property can get you the better remortgage rates and terms. If you can get below 95%, 90% and lower, loan to value, then you have a wider choice of the best rates from many more lenders.

Making overpayments may qualify you for a payment holiday or in some cases you can get the overpayments back from a reserve facility.

Not to have some savings. It is tempting fate a little. I find it very useful to have a savings account linked instantly to a current account so I can pay bills via computer whilst getting a good rate. If the money builds up then I can get a better rate by overpaying more of the mortgage or paying into an ISA.
If some unexpected expenditure is required. I can pay by a credit card with a zero balance, and get around a months to 56 days interest free credit before paying that bill, in full, with money from savings.


Here is an example of how overpayments payments reduce the length of the mortgage.
A £110K mortgage @ 5% over 25 years (300 months x £643). If you can overpay by £x per month then the term is reduced by n months.
£0 0 months
£50, 39
£100, 61
£150, 92
£200, 111
£300, 139
£400, 160
£500, 177
A 177 month reduction would leave a 123 month or 10 year three month mortgage.
J_B.

It is your own personal choice where you put your money. The relative interest rates of the options may suggest what is best. The widely varying terms and conditions of mortgages may restrict overpayments. Some say £500 max per month others are £500 min. Many allow a maximum of 10%, on a day, say Jan 1st. Remortgaging is not cheap. It is a good time to focus on what you want from your money and features you need from your mortgage.

I did not lose out with my mini-cash ISA but it is a very inflexible way of saving. You are limited by ISA withdrawals counting towards the total £3K you can deposit per year per person. You can get just over 5% on some, tracking Bank of England base rate. If your mortgage rate is greater than this then you are losing out with the ISA route.

The credit card ' up to 56 dayinterest free' example is just a standard purchase conditions with an interest charging card. I make money if I use a purchase rebate card (eg egg Money @1% or Amex Blue @0.5% sub £2000 total ). In addition I do have a Sainsburys 0% purchase card. I also pay my council tax on this. The balance on this card and more is earning interest.
J_B.