Repay mortgage tracker or save? Help!!

bulletproof_1979

Crazy_chick wrote: »

Hi everyone,

Until a couple of days ago I was convinced the best thing was to use some or my savings (~£10k) to pay off some of my mortgage, but having read the advice in Martin's "Should I repay or save" article now I am now so sure .

Basically I am on a tracker mortgage at BR + 0.36% (so currently 0.86%). I have just opened a savings account guaranteed 2% above BR (currently 3%), so my question is should I repay some of the mortgage or just stick the money into the savings account?

I have about £97k left on the mortgage and about 22 years I think.

Hi crazy_chick,

I'm in a virtually identical situation - 97k left on mortgage, 22 years, 10k ish savings, currently paying .69 above base rate.

I've come to the conclusion that the best bet is from now on is to always fill up the yearly ISA allowance for a start, and put the current savings that I was planning to overpay the morgage with into a current/savings account making the best interest available above that being charged on the mortgage until the point comes when the mortgage is charging more interest than the savings can earn. At that point I'll use them to pay off a mortgage lump sum.

This seems to make most sense, unless anyone can point out a downside?

Crazy_chick

bulletproof_1979 wrote: »

Hi crazy_chick,

I'm in a virtually identical situation - 97k left on mortgage, 22 years, 10k ish savings, currently paying .69 above base rate.

I've come to the conclusion that the best bet is from now on is to always fill up the yearly ISA allowance for a start, and put the current savings that I was planning to overpay the morgage with into a current/savings account making the best interest available above that being charged on the mortgage until the point comes when the mortgage is charging more interest than the savings can earn. At that point I'll use them to pay off a mortgage lump sum.

This seems to make most sense, unless anyone can point out a downside?

Yes I think I have come to the conclusion that this is the best way forward. Just have to get over the mind block of not over paying the mortgage becauser that's what I always thought I'd do.

Thanks everyone

bulletproof_1979

Me too - but I think a good mindset to get into is that money paid into the seperate savings account is basically money that has effectively been paid off the mortgage and is therefore locked and untouchable. Of course the big upside is you've got immediate access to it in an emergency.