Overpayment charge - is it still worth it?

saraburke

I need help with my maths, can anyone help me?!

I have a tracker mortgage and with the recent cuts I'm now paying a lot less per month than when I signed up for it.

There's a 3% charge for overpayments on my mortgage and I'm tied in for another 18 months. Interest is charged annually.

The interest on my saving account is 3.25% for the next year or so.

Does it make more sense to overpay the mortgage each month and take the 3% hit or put the money into savings?

And, if I put the money into the savings account do I leave it there until I remortgage or overpay at some particular annual interest friendly point of my mortgage year (iyswim) and when is that?

I like to think I'm fairly finance savvy but I can't work this one out!

Thanks for reading this far, and apologies if this has been asked before, I did a quick search and didn't see anything obvious.

Sara

littlemrtinkle

what is your current mortgage rate?

dimbo61

I am guessing that your mortgage rate is less than 6.25% so dont pay any overpayment charge.
Put any extra savings you have into Tax free ISA,s barclays paying 3.61% £3600 a year.
Then put £250 a month into a Barclays regular saver 6% before tax and wait until the end of your current deal and then pay a lump sum off the mortgage if you want to and it gives you a better LTV to get your nexy deal. EASY