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  • FIRST POST
    • Drucifer
    • By Drucifer 7th Jan 18, 3:07 AM
    • 9Posts
    • 7Thanks
    Drucifer
    Mortgage Overpayments
    • #1
    • 7th Jan 18, 3:07 AM
    Mortgage Overpayments 7th Jan 18 at 3:07 AM
    Hello,

    My fiance and I are setting aside money each month to overpay the mortgage, currently £100.00 a month.

    The idea is to save the £100.00 a month up until our first mortgage term is over (August 2022), then remortgage with the money saved as another "deposit" to reduce the term of the mortgage.

    We're currently saving it in premium bonds, just so that it's set aside from the rest of our money and there's the, albeit minuscule, chance of winning the million.

    There's a lingering feeling in the back of my mind that saving the overpayments in premium bonds isn't the best idea, as of course it earns no interest and the chances of winning anything are slim.

    I've considered investing it, (I'm already investing separately for retirement), but with less than 5 years I'm not 100% sure on this idea either, as it could drop a lot in value when I need it & I'm not sure what level of risk is advised for a 5 year time frame with money I will need.

    Or should I just phone up the lender and overpay the mortgage each time there's enough money to cover another payment?

    Is there a best choice here or is it down to personal preference?

    I appreciate any input.
Page 1
    • AlexTheLion
    • By AlexTheLion 7th Jan 18, 3:18 AM
    • 16 Posts
    • 15 Thanks
    AlexTheLion
    • #2
    • 7th Jan 18, 3:18 AM
    • #2
    • 7th Jan 18, 3:18 AM
    Have you not considered saving your extras in cash accounts? 3-5% interest accounts available from various providers with instant access if required. Or at least filling up the larger paying ones before heading towards the PB. I like the idea of the 'in it to win it' with premium bonds, but would be disappointed with no returns at all that could have been in a cash account.
    • Drucifer
    • By Drucifer 7th Jan 18, 3:31 AM
    • 9 Posts
    • 7 Thanks
    Drucifer
    • #3
    • 7th Jan 18, 3:31 AM
    • #3
    • 7th Jan 18, 3:31 AM
    Have you not considered saving your extras in cash accounts? 3-5% interest accounts available from various providers with instant access if required. Or at least filling up the larger paying ones before heading towards the PB. I like the idea of the 'in it to win it' with premium bonds, but would be disappointed with no returns at all that could have been in a cash account.
    Originally posted by AlexTheLion
    Thank you for your input.

    I did briefly consider saving it in a cash account, I've already got many accounts each with a specific purpose and to my knowledge, though could be wrong, I'd need a particular amount of Direct Debits to pay out or a certain amount to pay in to qualify for interest, just too much juggling around for my liking and extra things to track, and I prefer my Direct Debits to be at an absolute minimum.

    So not my first choice, but can be done if this is the best option.
    • kezzygirl
    • By kezzygirl 7th Jan 18, 9:12 AM
    • 622 Posts
    • 662 Thanks
    kezzygirl
    • #4
    • 7th Jan 18, 9:12 AM
    • #4
    • 7th Jan 18, 9:12 AM
    Thank you for your input.

    I did briefly consider saving it in a cash account, I've already got many accounts each with a specific purpose and to my knowledge, though could be wrong, I'd need a particular amount of Direct Debits to pay out or a certain amount to pay in to qualify for interest, just too much juggling around for my liking and extra things to track, and I prefer my Direct Debits to be at an absolute minimum.

    So not my first choice, but can be done if this is the best option.
    Originally posted by Drucifer
    Nationwide flexdirect have 5% interest and you only have to pay in £1000 per month- no direct debits. You font have to keep the 1k in there, I just do it by standing order and transfer it straight back out
    • bertpalmer
    • By bertpalmer 7th Jan 18, 10:09 AM
    • 97 Posts
    • 43 Thanks
    bertpalmer
    • #5
    • 7th Jan 18, 10:09 AM
    • #5
    • 7th Jan 18, 10:09 AM
    Personally I would invest it. My thoughts are that you could easily make 10% a year on it. Minimum. But that’s just my attitude to risk - assuming 3 year minimum period.

    Premium bonds wouldn’t be on my radar as an option.
    • atush
    • By atush 7th Jan 18, 11:33 AM
    • 16,460 Posts
    • 10,204 Thanks
    atush
    • #6
    • 7th Jan 18, 11:33 AM
    • #6
    • 7th Jan 18, 11:33 AM
    If you have emergency cash, cosider a s&s isa as well

    What are your pensions like?
    • LHW99
    • By LHW99 7th Jan 18, 12:01 PM
    • 1,067 Posts
    • 916 Thanks
    LHW99
    • #7
    • 7th Jan 18, 12:01 PM
    • #7
    • 7th Jan 18, 12:01 PM
    What is the current mortgage interest rate? If that is more than about 3%, and you are able to overpay without penalty, then overpaying as you have funds could be a good option, as you would then be reducing the interest you pay overall and will build up equity in the current property to rollover.
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