Overpay or Save or Move???

v.rajput

Hi, i am still quite new to this but here goes, i am in the position to overpay my mortgage(0.89% above base rate)by £400/month to bring it down to approx 10yrs from 20yrs....but i also want to move.

Do i overpay, knowing that my interest will be less and i will pay off my debt quicker, and have more money in the bank when i sell? ( bearing in mind currently no - one is buying)

or

Keep saving, and have a bigger deposit of cold hard cash if and when i find a buyer/new home.

Thank you = stuart

Josepina

i would say save for more flexibility

homeaway

v.rajput wrote: »

Hi, i am still quite new to this but here goes, i am in the position to overpay my mortgage(0.89% above base rate)by £400/month to bring it down to approx 10yrs from 20yrs....but i also want to move.

Do i overpay, knowing that my interest will be less and i will pay off my debt quicker, and have more money in the bank when i sell? ( bearing in mind currently no - one is buying)

or

Keep saving, and have a bigger deposit of cold hard cash if and when i find a buyer/new home.

Thank you = stuart

If you pay off your mortgage earlier you will save yourself a lot of money in interest. There is a calculator somewhere on here( sorry not sure where) to show you how much you will save in debit interest by overpaying.

You could save some money every month and overpay as well. If it were me i would make sure i had at least six months salary saved and then start overpaying the mortgage. My view is that if you dont have a mortgage you have more freedom in life to do what you want to. As long as you have a mortage the bank owns the house, not you!
Good luck

dimbo61

The best way ( at the moment ! ) is for you to pay into a cash ISA,s and fill that first £3600 this year till april 4TH paying 6.25/6.5%.
Do the same again next april 5TH and then overpay on the mortgage as you are currently paying 5.89 and soon to drop to 5.39%.
If you can save into high interest savings accounts such as the halifax 10% saver this could give you a better rate of return than overpaying the mortgage. Savings or overpay both are good.

v.rajput

Hi, thank you for all your replys....at the moment i will save the extra money, that i would use for overpayment, and see what the future brings with the house move!!1
thanks to all

ailuro2

Put the extra money into your overpayment fund, make sure it is still accessible.

http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings has a calculator at the bottom to compare the best rates you need to find to have savings instead of overpayments.

v.rajput

Hello again, now im stumped again...if you remember i am on .89 above base rate. Isas topped up, have savings etc and emergency fund.

I know that savings rates will pay higher than the intrest on my mortgage...but why am i thinking, "while the intrest is low, pay off a lump sum or /and overpay" therefore when rates go back up there would be less of a debt and less intrest to be paid on it?

I suppose a factor would be when my intrest is added and calculated?????

Ps could really do with a new boiler and kitchen and possibly bedroom in loft...maybe do that and haggel with builders!

Lynn11

Good question as I was thinking about this recently. We were expecting not to stay in this house as it is only 2 bed and hopefully move upwards, but not sure if this will be possible all depends on husband's new job wage (he is in the housing industry and trying to find another job before he is pushed). Anyway I have made overpayments to our mortgage for the last 3 yrs and hopes this will help us if we are able to move in several years as the mortgage amount will be reduced so not increasing the new mortgage too much. We have savings there which I do not want to touch especially in this climate, in case we need it. I am going to try to continue to overpay and put a bit away in savings until times get really bad.

dimbo61

Hi v.rajput
As your mortgage rate is now 3.89% its better to save into ISA,s and any other high interest savings account you can get.
The building industry is quite so lots of builders looking for work
Would having loft conversion add value and be of use to you!
Same with kitchen , new boiler !! Get a good deal on work