Overpayments/Savings

ironman1

I posted this in the other forum but it may have been the wrong place, if not then feel free to delete this!

ve posted a similar topic on another forum but if anyone could help i'd be grateful. Me and the other half are both 23 and living in our first place (moved in October 2008).

Due to high deposits and so on we got a 50% shared ownership in a nice new build 2 bed flat in a decent area which cost almost £200k, our first place. We paid a deposit which took our share down to around £86,000 mortgage, with the other half rent. It is quite expensive but we are aiming on eventually buying the other half. At the moment we are paying it off over 40 years (the advisor talked us into it!) but now pay a standing order of £100 extra per month.

My question is, with around £6k in savings should we use all or some of that to pay some of the mortgage off or keep it and carry on paying the ridiculous interest fee's? (We are on fixed for 5yrs at 6.1%).

At the moment we cannot consider using the savings to buy more of the property, what with work being a bit dodgy at this moment in time.

Basically I just wanted some advice in what to do with the £6k savings. it's not a huge amount I know but we dont owe any other debt other than the mortgage.

Should we-
Use it to pay off some of the mortgage
Use half of it to pay a bit off, save half for a rainy day
Save it but keep overpaying as much as possible
Or blow it all on drink and drugs

Any advice welcome. Thanks for reading!

uklad_2

I have been considering the same thing recently i would be interested to know other peoples views..

Personally I am hanging onto my savings and investments for two reason.

1, the security of having the rainy day fund
2, some investments have lost money no point cashing in now.

Mini_Bear

Personally i wud look at whether you could live off one salary if one of u was made redundant. if it will be a squeeze work out how much more you would need in cash to last u 6 - 9 months. this assumnes it will take the redundant partner 6 - 9 months to find a new job. i would use any additional cash u hav to overpay the mortgage. i wouldnt shorten the term of the mortgage if the are job worries as its difficult to extend a term once its been shortened.
So my advise is make sure u hav sum sort of rainy day fund relevant to ur needs and then concentrate on overpaying your mortgage.

dimbo61

As you only have £6k in savings/rainy day funds I would make sure you are getting the best interest rate you can and just continue with what you are doing.
Pay the mortgage, save a little each month and overpay a little as well.
If you or your OH get a pay rise then up the savings and the overpayments ( use half the rise) and enjoy life together.
You will pay very little off the mortgage in the first 5 years of a 40 year mortgage so every overpayment helps.
In 5 years you may be in a better position to reduce the term. GOOD LUCK

ironman1

Thanks for the advice. I think we will probably keep it it's just we get no interest at all on the 6k. I want to keep the 3600 in the ISA but the rest just seems to be ... sitting there! It's nice to have it to fall back on but from reading this site I have learnt quite alot and thought maybe we would be better off putting it towards the mortgage...