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Offset - overpay or add to savings?
splatt30
Posts: 339 Forumite
Just a quick question for those of you who are also on offset mortgages.
We have a fully flexible offset mortgage from First Direct, which is offset by 2 current and 2 savings accounts. We only HAVE to pay interest due, but pay what we would need to for our term and rate as if we weren't offset. So essentially overpaying by the interest earned on the money in the current and savings accounts.
Having convinced hubby that a MFW status us a good one we've decided to start with small steps and start to pay more toward the mortgage. So, our first is to cut our grocery bill by at least £15 per week. That should leave us with an extra £60 a month.
But I can't decide whether to add this to the standing order for the mortgage payment. Or to simply put it in the joint savings account. This is already split into 'funds' (ie holiday, house, car etc) so could simply be called 'overpay fund'.
What do the rest of you offsetters do?
We have a fully flexible offset mortgage from First Direct, which is offset by 2 current and 2 savings accounts. We only HAVE to pay interest due, but pay what we would need to for our term and rate as if we weren't offset. So essentially overpaying by the interest earned on the money in the current and savings accounts.
Having convinced hubby that a MFW status us a good one we've decided to start with small steps and start to pay more toward the mortgage. So, our first is to cut our grocery bill by at least £15 per week. That should leave us with an extra £60 a month.
But I can't decide whether to add this to the standing order for the mortgage payment. Or to simply put it in the joint savings account. This is already split into 'funds' (ie holiday, house, car etc) so could simply be called 'overpay fund'.
What do the rest of you offsetters do?
0
Comments
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Hi Splatt30, I had the same dilemma, especially as it doesn't really matter to the figures from an interest point of view, only if you needed the money.
What I ended up doing was, if I had an amount of say £110, I'd pay £100 to the savings pot and £10 to the mortgage. I'm already making a regular overpayment of circa £200 pm anyway so, I figured anything extra just helped but what I couldn't bear the thought of was drawing down any overpayments I'd made to the mortgage if I needed to pay for something big.
Oh dear, I do hope that makes sense, on reading it back I'm not so sure!
:rotfl:
LM:jMFWin3T2 No 20 - aim £94.9K to £65K:j
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Yes makes sense.
I would be far less tempted to take it back if it was over paid to the mortgage account. Maybe splitting it is the way to go.
Anyone else any thoughts?0
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