Ovepay or save?

tcb1973

Quick bit of advice please.

Moving next week, FTB, mortgage of £119,000 on a £140,000 house (85% LTV), monthly payments of £673, 5 year fix

Is is better to overpay the mortgage by a yearly lump sum of £1200 (minimum), reducing the term. OR, save the money, in preparation for moving onto the SVR and possible high interest rates? OR, overpay for first 2-3 years and then save in last 2?

Possibly thinking a bit too far ahead, but want to be prepared.

Did think about not buying at all, but life is to be lived, and after 10 years of renting, ya da, ya da, ya da.

Cheers chaps

beecher

I'd make sure you have an emergency fund first of all, for repairs and unexpected expenses. Then see if you can get a savings account which gives you more interest than you're paying on your mortgage. If you can, then save and then overpay. If not overpay monthly. Keep an eye on interest rates and make sure you're overpaying enough to be prepared for higher interest rates.

cocktail

about 6 months of expenses including mortgage in savings before overpaying. in your situation i would overpay to the maximum allowed to get the LTV down ,by the time you come to remortgage in 5 years.congratulations on the house as you said life is for living.