Decisions. Pay off mortgage or save for new house..

Grz.26

Ok, heres the situation..

My partner and I have a small flat with mortgage of 81k. I have savings of 20k and can pay 2000 per month into the mortgage. But I am not sure weather to pay off the mortgage or save this money to put down on a new house.

It'll be great to own this flat out right and would take 3 years or so.. But don't know weather this is a good route to go down.

I have set up a offset mortgage at the moment to knock down the interest.

Options.. Over to you guys...

Grz.26

Welshlassie

If you have an offset mortgage then why don't have the best of both worlds. Offset your savings against the current mortgage so you pay less interest and your normal monthly payment therefore pays off more of the capital. Then you can continue to build up your savings ready for your next house.

CountingPenniesClaire

Hi Grz.26

We are in a similar situation with similar figures. We are working hard to pay off the mortgage so we can get another one on a second home - the idea being that we can rent one and in the future have an income other than just via our jobs. Welshlassie is absolutely right about the offset arrangement - we have just moved to a First Direct offset BOE tracker and we will just pile in OPs into a lump sum in the linked accounts. This lump sum will allow us to take an opportunistic approach to buying a second home - possibly enabling us to buy right at the bottom of the housing slump (I don't think we are there yet!). But until then we'll just continue to OP, build up a lump sum and reduce our mortgage interest charges. My advice to you would be to play the long game too - patience is not exciting but has its virtues!

Claire