Should i overpay on mortgage or save?

ROLF580 · 14 July 2010 at 4:22PM

My mortgage is currently 200,000 interest only at 0.35 above base on a tracker. I am thinking about making overpayments to try and get the capital part of the mortgage down, my question is should i instead save any spare cash in savings or start paying of the capital on my mortgage?

[threadbanner] box [/threadbanner]

lee636 · 14 July 2010 at 4:55PM

Depends on other factors. How long do you have left on your current deal? How much can you overpay? How much could you save and potentially need if the interest rates went up and you had to fix at a higher rate (for example)?

mlz1413 · 15 July 2010 at 1:13PM

Do you currently have any savings?

I have an ISA that has the full £3600 limit for last year, I'm not going to add any more as my mortgage is 5.5% so I'm better off paying that off. But I like having savings that are quickly accessable for those surprises and rainy days.

As your mortgage is a lower % than you can save at you need to make a long term plan of how to repay the capital. For this you will need to know how much you can over pay our mortgage at.

If you can pay lump sums without penalty then save now and pay off mortgage as interest rates rise.
If max yearly values then you could save for 11 months and pay off mortgage in 12th month.
If monthly then INO pay the mortgage down.

MrsManda · 15 July 2010 at 1:17PM

Also, can you use your overpayments to take a payment holiday/reduce your monthly payments if you need to later in the mortgage?

Should i overpay on mortgage or save?

Comments

Confirm your email address to Create Threads and Reply

🚀 Getting Started

Categories

Is this how you want to be seen?

Get our FREE Weekly email full of deals & guides - and it’s spam-free