Overpaying Mortgage ...

Ali660

Hi there,

We have just managed to reduce our £107K IO mortgage to £70K by paying off the difference using some redundancy money. The next stage is to overpay but I'm a bit confused - is it best to overpay on a monthly basis or save up to pay off a lump sum annually?

Our mortgage allows unlimited overpayments and the interest rate is 3.49%

Any suggestions welcome :j

Peelerfart

If you can get a better savings rate then 3.49% then save it there and pay it off as a lump sum. It's also available if you need it in the interim for something else.

johng_uk

I think that the best paying ISA around atm is Barclay's (3.61%) and you can find 'bonds' paying upto 4.3% (with tie-ins for the cash etc).

If it was me, I would overpay as much of my mortgage as I could at this moment in time. This would reduce how much you owe, and future-proof you for when interest rates eventually rise again and you look to re-mortgage.

Also as peeler says, if you needed access to the cash it's there. Always a good thing in todays economic climate.

Ali660

Thanks for the advice guys, I'm convinced it's the right thing to do at the mo. We've got ISAs in place and a little put by in savings accounts so the mortgage is going to get it next!

Ali x

johng_uk

Ali660 wrote: »

Thanks for the advice guys, I'm convinced it's the right thing to do at the mo. We've got ISAs in place and a little put by in savings accounts so the mortgage is going to get it next!

Ali x

You know it makes sense!

Peelerfart

johng_uk wrote: »

You know it makes sense!

He's right you know

Lynn11

I manage to save about £400 per month in different savings accounts as well as paying an extra £200-£250 per month overpayment to the mortgage, so that we have money there if hubbie jobs goes and we can survive for at least 8-9mths but I am also happy to know that I am also paying off some of the mortgage every month. Good luck on your MFW journey.

johng_uk

Peelerfart wrote: »

He's right you know

Why thank you - Don't hear that often enough!!

dimbo61

You could also put £250 a month ( up to ! ) into a Barclays 6% regular saver for the next 12 months and use that plus the interest to pay a lump sum off the mortgage.
Better still if you are a non tax payer
HSBC have a 8% RS but you need to bank with them.
GOOD LUCK