The Mortgage Free in Three - Take 2 challenge (MFiT-T2)

skaps

My mortgage rate is now 3.5% the same as my isa, I am overpaying the mortgage but should I put it into my isa instead?

chickadee

I can't see that it makes a jot of difference. Your ISA is tax-free so the net effect is exactly the same. Depends whether you want a reduced mortgage or some savings that you can dip into. Personal choice I'd say.

cha97michelle

skaps wrote: »

My mortgage rate is now 3.5% the same as my isa, I am overpaying the mortgage but should I put it into my isa instead?

Up to you that one.

I'd consider how easy it is to get money back if you desperately need it, plus, with ISA's, use it or lose it. Get it in this year, and its tax free for the duration. I think I'd be struggling to choose between the 2 there. Good isa rate there. Thought mine was good at 3.3. Is that rate for longer than the financial year?

skaps

No its not. It was the Santander ISA. I think its best if I overpay as I know what I'm like, I would be tempted to use it elsewhere.

RosieTiger

chickadee wrote: »

I just had to share this with someone, but it isn't really something I want to share with my friends.

My balance has just gone below £10k. That's right - I now have a 4-figure mortgage!

I'm now at £9,277 after having made a whopping overpayment of just short of £1,500 in September. I managed this because I had some money in a savings account that I didn't need for my holidays (which was the original purpose of the savings account) and I had some expenses from work that I claimed which mounted up to over £300. I have also had a really frugal month, with no major expenses to pay out.

The money was in a low-earning savings account that had been attached o a regular saver on quite a good rate but when the 12-month period is up they move it into a measly interest savings account so I decided to withdraw it and put it into my One Account as extra mortgage payment.

I have now extended my finance spreadsheet up to May 2012, when I expect I will have paid it off in full!

Like adwat, I'm finding it a bit hard not to wish these last few months away when I will be mortgage free. I'm 44 so it feels like a really liberating thing that I will have no mortgage very soon.

Congratulations on breaking a really big milestone!

cha97michelle

skaps wrote: »

No its not. It was the Santander ISA. I think its best if I overpay as I know what I'm like, I would be tempted to use it elsewhere.

I know that one. Mentally, I am good at not going in the ISA or the OP reserve already overpaid in the mortgage. It's a safety net, but it would take a lot to make me spend it. The money in savings however ping pongs about a fair bit. If you know you'll spend it, then definitely overpay.

Kaz2904

Hi all. Funny to see that everyone's thoughts are turning to savings and ISAs. I have been going over the same thing with DH myself over the last week.
He had an inheritance which means we should have £21000 in savings. We have done work and therefore have £12000 in savings. We each have just over £3000 in an ISA and the rest is milling around in poorly performing accounts. I would have transferred it all to ISA's years ago but he wouldn't let me. Hohum.
We are also overpaying the mortgage 4.99% and repaying my Mums loan £500/month. The loan finishes 22/11/2011. The £550 is then meant to snowball to the mortgage.
We are also going to Florida next year. We will need a minimum of £4500 to pay for tickets, spending money and a very small amount towards the holiday.

DH now wants all savings money put in a separate acc (been after him doing this for years but he just leaves it to me and then whinges!).
He wants the £500 per month paid to replacing savings (which are earning naff all wherever they go.
He doesn't want his money/the money/ whatever it's called put into ISAs. He doesn't understand ISAs really but he won't read the guide. He can't figure out how he can't just put £10k in an ISA and goes mad when I say he hasn't got £10k to put in an ISA! I'm hoping he's read up on this tonight and last night.

What we are actually doing is continuing with our current planned snowball. I will work extras to get the money needed for the holiday. Anything I haven't managed to earn will have to come from savings. Anything we manage to scrimp and save from the monthly budget will go towards repaying savings.

I worked out that it will cost us a minimum of £800 if we go with DH's plan. It's not like he wants the money in savings for a reason or they're being saved for any purpose. As he won't use it as an ISA I fail to see his point and he just doesn't grasp that we would have to earn 6.2% to beat our mortgage rate in savings accounts. If it were me, I'd have shoved the whole thing straight onto the mortgage in the first place and have done with it. Just think, we'd be mortgage free by now then.

Sorry, bit of a waffly post but if any of you can offer hints or tips, I'd be grateful

Trying_to_be_good

Hi everyone, I'm joining in on the ISA v overpaying v other savings debate.

As you can see in my signature, I have cash ISAs as well as an offset mortgage. When I can get a cash ISA that matches or beats the mortgage rate, I take that (two different five-year ISA fixes and a three-year ISA fix, all with Nationwide). But our mortgage rate is 4.49% (fixed for five years from July 09), and at the moment I can't get a rate that matches that rate and time-frame.

I'm giving myself the flexibility that I can access the ISA cash at about the same time as the mortgage fix ends, or I have tax-exempt interest continuing on those if I don't want to directly pay that off the mortgage.

I also have ready access to the offset savings, so it's not my emergency savings fund. And an OH that isn't wholly bought into all this, so I don't see why I should save to pay off the mortgage whilst he spends all his (higher) salary - this way the pots of money are even more separate than the savings in the offset, as the ISA actually gets the interest rather than savings the mortgage interest.

Each to their own!

someday_soon

I've had several ISA's down the years, but have always found a reason to use the cash in them before the year is out.:rotfl: As my mortgage rate is 2.5% I suppose any gains would be marginal anyway. What my simple head can't figure out is those regular saver things- surely they work out better than ISA's over the year? Should we be looking at syphoning some OP cash through those?

chickadee

someday_soon wrote: »

I've had several ISA's down the years, but have always found a reason to use the cash in them before the year is out.:rotfl: As my mortgage rate is 2.5% I suppose any gains would be marginal anyway. What my simple head can't figure out is those regular saver things- surely they work out better than ISA's over the year? Should we be looking at syphoning some OP cash through those?

The rates for regular savers look good but the interest is taxable, unless you are a non-taxpayer. That usually makes a cash ISA a better option as the interest is credited tax-free.