Overpay mortgage or put XS cash into savings, or even an offset account???

tamarabclat

Ok, I really really can't work this out - I just get myself all confused everytime I try to work the figures out!

We have a tracker mortgage which tracks at .075 above the base rate for the life of the mortgage.

We can afford to overpay (at the moment) £200 but are expecting the payments to drop further by dec/jan when they apply this recent 1.5% IR cut, so the overpayment will then be more.

Is this the best way to use this extra cash that is being freed up by the dropping interest rates? or should we put it into a savings account and then in a few years, pay more of a lump sum off - which is most lucrative?:think:

We also have 2 years of ISAs each and 15k in Kaupthing Edge (who e-mailed me today to say the IR had dropped to 4.55%:sad:

I am going round in circles trying to work it out.

We can overpay as much as we like with our mortgage too, no limits.

Many thanks in advance for any help

Welshlassie

Can you get the Overpayments back if you needed cash quickly?

Does yur current mortgage have an offset facility, if not then you'd have to change mortgage to offset your savings.

Have a look around see if you can find a savings account which will beat your mortgage rate net, see if the Halifax still have the 10% regular saver account. There might still be ISA's out there with rates for around 5.5% or 6% that you could transfer your ISA's into to get a better return. That's the key, if you can get better savings rates that your mortgage (after tax) then save, if not Overpay.