Overpay V Savings Quandry?

elwistua

Hi all, recently found the site and is a real eyeopener!!

My quandry is we have a repayment mortgage with 12.5 years to run and a fixed rate of 5.49% APR until Sept 08. I have spoken to the Halifax (mortgage) and we can 'overpay' 10% of the beginning of the years balance and the mortgage is calculated daily. The current balance is £42k.

We have a savings pot of £10k which we have in a Barclays E-savings account and are wondering whether to:

Keep the savings going and make regular monthly deposits (approx 500-600 per month).

Or

Open 2 ISA's in each of our names (we are not married) and deposit £3k in each.

Or

Pay off the maximum 'overpayment' for this year ie £4200 and then pay make over payments either every month or once a year? The balance between the normal savings and overpayment will be saved.

The main aim is to pay off the mortgage and live the debt free lifestyle! (hopefully).

Would appreciate any input from an 'independant' view point.

Thanks

gavted

I couldn't recommend what you should do without more details, but your situation is very similar to one I was in a few years back.

We opted to pay as much extra off our mortgage each monthas we could afford/was allowed, and saved what we could. :T

You will be surprised how much difference a few hundred can make. If you visit the egg.com website (not my provider), they have a nice little charting facility that allows you to see the cost of you mortgage as a nice curve, as the years progress.

Add in monthly overpayments and watch the curve drop. We are now looking at finishing our mortgage (using our savings) next March (2007), instead of having another 15.5 years to go. :rotfl:

Trust me you wont regret it. Finally, most lenders put your overpayments into a reserve, so should you need to you can always borrow some or all of it back at a later date. So essentially another savings account, but tax free interest ata better rate.

Gavin :beer:

elwistua

Thanks for that, it would be nice to think we could be mortgage free before I am 37.

tomstickland

I'm mortgage free at 33. But I haven't started one yet!