Who drew out their savings to reduce their mortgage

ninky_2

I'd overpay the mortgage. You're unlikely to get a return on your savings that is greater than the interest you are paying on your mortgage debt. And if that changes in future you can always move the money then.

SuiDreams

Currently overpaying mortgage (currently at 3.5%) by a small amount and saving, still have a few months left on some higher rate regular savers. May increase the overpayment when these end depending on what the mortgage rate is then and what rate I can get my savings at. I can only over pay by 10% per year for the next three years though. Will hopefully be able to pay a large chunk off when current deal ends.

Primrose

clare - in normal situations I think most people would recommend putting your redundancy money into the mortgage. However, these are not normal situations. The economy is still deteriorating and you don't know how long it might be before you get another job so experts recommend you keep between 3 and 6 months expenditure in an easy access account. That could be an ISA (provided it terms allow you instant withdrawals) and if you can put £3600 in before April 5th and £3600 into next year's allowance from April 6 that will at least use protect your allowance and keep your options open in the hope that you get another job soon and become a taxpayer again. Once you get another job you can then decide whether you prefer to use the money to pay down your mortgage.

spandles

We are with the Nationwide (fixed until Dec 2011). Had meeting with Mortgage advisor last weekend. Are you aware you can 'withdraw' your overpayments if you needed to. We are thinking of putting most of our savings into mortgage just leaving a few thousand for rainy day needs BECAUSE we can draw back the op money, and (I need to look into this further but...) if you have too much in savings you do not qualify for benefits should you face redundancy?

esthomizzy

I haven't yet but I'm seriously considering it. I'm probably going to buck the trend and use my savings to pay my early repayment charge (I can get a rate 1.5% better than my current fix and then the new much cheaper 5 year fix. I don't think these cheap rates are going to last long either and I'd like to bank some of the action for as long as possible. I'm also thinking I'll take an interest only mortgage and repay as flexibly as I like on my own terms (at the same level as I was paying on a repayment but a shorter term).

My current favourite is the post office's 4.15% 5 year fix for 75LTV.

Lexxi

spandles wrote: »

and (I need to look into this further but...) if you have too much in savings you do not qualify for benefits should you face redundancy?

I think it's around 6k, I think.

I'm going to shift my savings around and OP by the maximum each month if I can't get a better rate on savings.