Saving v Mortgage

sloughflint

Inforapennyinforapound wrote: »

Thanks to all above posters.

I tend to agree that the mortgage should take preference.Its just reassurance that others think the same way....Saving money now may as well be under the mattress!!........

Unless YOU know different

If you fancy banking with First Direct (condition for the ISA) : Regular ISA pays 7%.

http://www.firstdirect.com/savings/regular-saver-isa-overview.shtml

Also A&L Premier direct pays 5% ( 4% net >3.19%) on £ 2500 if you are prepared to rotate some money to satisfy the £500 monthly funding requirements.
http://www.alliance-leicester.co.uk/current-accounts/premier-direct-current-account.aspx

I would look at those two options before thinking about overpaying the mortgage ( if overpayments are penalty free).

Money_Grabber13579

sloughflint wrote: »

If you fancy banking with First Direct ( condition for the ISA) : Regular ISA pays 7%.

http://www.firstdirect.com/savings/regular-saver-isa-overview.shtml

In my opinion, regular savers aren't all that they're supposed to be. They're just another con trick from the banks to get new business. If the money was on deposit for an entire year, in order to gain the same interest you would only need about 3.2%! But again this isn't relevant to the OPs question.

sloughflint

Money_Grabber13579 wrote: »

In my opinion, regular savers aren't all that they're supposed to be. They're just another con trick from the banks to get new business. If the money was on deposit for an entire year, in order to gain the same interest you would only need about 3.2%! But again this isn't relevant to the OPs question.

You are in danger of confusing the OP here.
OP has a regular monthly amount spare rather than a lump sum so the comparison to be made is simply: 7% > 3.19%

Jude123

I agree with you. We were talking to an IFA last week as we will have some spare cash per month which we were thinking of using as mortgage oveerpayemnt. But he suggested otherwise because in our circumastances our mortgage rate (1.25%) is a lot less than some of the savings rates that you can get. So instead we are going for a regular saver 5% fixed rate for one year cash Isa with principality building society. Then when our mortgage rate goes above the savings rate we can just use the lump sum as a big overpayment on our mortgage.

Obviously this scenario works for us and would probably work for the OP as their mortgage rate of 3.19% and they could get a higher rate in a cash isa.

HTH

baby_boomer

Jonbvn wrote: »

Eh

I was responding to the poster who said mortgage rates are always higher than savings rates????

Well current tracker rates are different from your rate which was arranged in another mortgage time warp. The good old days when you rearranged your mortgage every two years, for an affordable fee, for less than you got on your savings are gone.

You simply can't get the rate you've bagged for life.

Well done! Enjoy it! Other savers & borrowers will have to pay for you indirectly.

Money_Grabber13579

sloughflint wrote: »

You are in danger of confusing the OP here.
OP has a regular monthly amount spare rather than a lump sum so the comparison to be made is simply: 7% > 3.19%

But surely that 3.19% is AER, whereas the 7% is gross, so they will be totally different rates, no?

thumshie

baby_boomer wrote: »

Well current tracker rates are different from your rate which was arranged in another mortgage time warp.

This time-warp was only probably 5 months ago...

Some current SVR rates are at the level where saving may be a better option that repayment - Nationwide/Lloyds are 2.5% yet you can get 6mnth/9mnth fixed savings for lump sums that beat this-atleast basic rate payers- and as stated by others there is Regular savers that will help those with month disposable income, and isas for the small lump sum people.

While jonbvn post might not help the OP it atleast will highlight to the other readers of this thread that it isn't as clear cut as 'repayment is always best'

sloughflint

Money_Grabber13579 wrote: »

But surely that 3.19% is AER, whereas the 7% is gross, so they will be totally different rates, no?

I don't understand what point you are making. FD account is 7% AER. Feel free to pm if you are still unsure/interested but I don't want to make this thread any more confusing.

As far as the maths is concerned, the concept is quite simple. It all depends if OP wants to be bothered with the work involved for either of those accounts I mentioned.

The minute the rate balance tips the other way ( at a guess in a year's time), then OP should empty the accounts and overpay the mortgage with the lump sum assuming that's within the T&Cs

Inforapennyinforapound

Thanks to all for some interesting ideas. Its all as clear as mud now!

I didnt mean to start a war,but i think its all opinion because none of us knows what will happen.

Rather than mess about with some money here,some there,fixed rates,compulsory monthly payments etc having read all advice i think i will pay off some mortgage capital.
This si so much easier,clear cut and as someone said earlier to be mortgage free must be the aim of us all with these huge debts hanging over us.

Money_Grabber13579

Inforapennyinforapound wrote: »

Thanks to all for some interesting ideas. Its all as clear as mud now!

I didnt mean to start a war,but i think its all opinion because none of us knows what will happen.

Rather than mess about with some money here,some there,fixed rates,compulsory monthly payments etc having read all advice i think i will pay off some mortgage capital.
This si so much easier,clear cut and as someone said earlier to be mortgage free must be the aim of us all with these huge debts hanging over us.

Yea just ignore all of my posts after post 3 - don't know what I was thinking!:eek: Still of the opinion though that'd be better to pay off the mortgage and then save. Although, as has been shown in some cases, if you can get a savings rate that makes it worthwhile doing it the other way round, then sure, go for it! Just check the sums first and make sure they add up! (Unlike mine:D)