Is now a better time to overpay??

badboy9380

Hi all,

Not sure if this has been covered yet, if it has I apologise. Had a letter through the door this morning from Northern Rock, advising me that my SVR is coming down to 5.34% as of Jan 1st. I was wondering if it is better to whack big overpayments down now as oposed to when the interest rates were high. We have approx 20K in savings by utilising mine and wifes ISA's and a further 2.5K in a savings account, so this is our emergency funds. Wife is just finished maternity leave but her work have said no to her flexible working request, so she's in the process of finding a part time job. And finally, is it a good time to switch to another mortgage deal or should we stay on our SVR-5.34% for a while and see what the market does, we still have 21 yrs to go and 87000k mortgage.

Sorry for rambling on, I've tried to give as much info as possible, and replies would be gratefull.

co123456

Is your NR mortgage flexible (with a borrowback feature)?

If so, could you overpay the 20K with the reasurance that you could have it back any time you like? (i.e. what I'm doing with my Stoozing money right now)

badboy9380

cheeryoleary wrote: »

Is your NR mortgage flexible (with a borrowback feature)?

If so, could you overpay the 20K with the reasurance that you could have it back any time you like? (i.e. what I'm doing with my Stoozing money right now)

Hi cheery,

no, it used to be flexible with borrowback when we were on fixed rate deal, but that stopped when we went onto the SVR, i see your thinking though.
Thanks for the reply.

dimbo61

With your current situation re the wife on mat leave and hoping to get part time job I would keep a good emergency fund !
Overpay each month what you can afford

Welshlassie

also keep you ISA tax free, you'll never get back the tax free benefit.
Have a look out there for mortgage deals, consider offsets (that will accept ISA's), see a broker (independent) that's you best bet to decide if worth changing!

ragingbass

I'll be keeping the ISAs, but I'm going to be overpaying more rather than saving right now. The mortgage rate isn't too bad, but it is fixed at just under 5%, so for me it works out a better saving strategy

dimbo61

Ask your wife to contact union re the lack of flexible working for new mums
if she is happy at her current job.
You could pay off some of the mortgage as you will struggle to get 5.34% after tax or in an ISA now but keep around £16k in savings !
After xmas contact a broker or look round the mortgage market yourself and consider an offset long term fix ( 5 years ) at 4/4.5% so you and your new family have security for the next 5 years while your child is young and not at school. GOOD LUCK

BARGAINHUNTER!

I have an offset mortgage with IF and I am allowed to hold my ISA within the offset. I transfer the maximum from my savings account (also offset) into my ISA each Financial year and leave it there. It means that if I want to I can transfer the ISA to another provider without losing the tax free status. Remember - if you don't use your tax free allowance each year you lose it!!!