which is better....

lizzie123

to over pay on your mortgage (anything between £50 and £500 depending on circumstances each month) or to save the money in a high interest account and build up enough to pay a few thousand pounds off in one go??

Gorgeous_George

Depends on the interest rates.

If the savings are 6% after tax and the mortgage is 5.99%, it's generally better to save.

GG

lizzie123

thanks for the reply, just one question as my mortgage rate is 6.05% does that mean I would have to find a savings account that pays more than that rate to make it worth while?

Locoblade

Yep, but remember the savings rate would need to be after tax, which either means saving into an ISA (tax free) or finding a regular savings account at about 8%, which isn't going to happen.

lizzie123

thanks for the advice, you've given me something to think about!

Gorgeous_George

I like to lock my savings in to fixed rates for a number of years such as a 6.25% - 6.5% cash ISAs.

With interest rates on my traccker mortgage falling this seems like a no-brainer but the savings are limited to £3,600 per year. But it is every year and a nice little nest egg can be realised over the years.

GG

Ian_Griffiths_Halifax

You also need to consider whether or not you might want to 'borrow back' this money. If you overpay you want to check that you can get it back.

In general, it doesn't make sense to pay a higher rate to borrow the money than the rate lower rate you will get on savings, as Locoblade has said, after tax or tax free.