Temporarily Saving or Overpaying?

KILOCHARLIE

Recently I've been working flat out to try and get money since times are hard and all. I've moved back with my folks, rented out my flat, been putting in overtime at work and managed to get a few 0% loans off flush friends and a fee free credit card. Question now is what to do with this money.

My mortgage is currently a 5% on a&l's variable rate after finishing my fixed rate a few months ago. Apparently you can pay off any amount of your mortgage now without penalty, so i'm very tempted to use the cash to do this and thus reduce my monthly payments. I see this as a far better deal than if i stick it in a savings account which pays around 3.5%. Only worrying thing is that eventually I will need to pay the money for the loans back and thus need to get back overpayments I have made to my mortgage.

Does anyone know if doing this is feasible? I am yet to speak to a&l about a refund of any overpayments, but I would though plenty of people would be doing this rather than saving any spare cash if it were possible.

thanks all

KILOCHARLIE

bump!!!!!!!!!!!!

Cannon_Fodder

Apart from the mortgage, do you need this cash you borrowed from friends?

If not, give it back. No point having an open-ended arrangement like that between friends. Inevitably in 6 months, it will transpire that the friend thought you meant X period, while you thought Y period, causing ructions in your friendship, all for a few quid...

If you have a clear, preferably written arrangement, and for any 0% credit cards, stick it somewhere for the given period, 6, 9, 12 months. Then give the money back and use the accumulated interest as an overpayment.

Returning overpayments will depend on the Ts & Cs of your precise mortgage. Speak to A&L.

Oh, have you told A&L about renting the flat out...? Do so, to ensure your buildings insurance is not invalidated...

KILOCHARLIE

thanks for the reply.

noted about the friends, i guess it will only save me a few quid a month.

the credit card has 0% for 9 months though and i've already been accepted. I will check with A&L and if not stick it in an isa.

yeah, i've told a&l about the renting and its all ok (£100 charge though)

so i take most people don't do this with their mortgage then?

getmore4less

Loads do, but it needs the right kind of mortgage as part of the plan.

Offsets work best.

dimbo61

If you are renting out your flat and the rent covers the mortgage payments ?
Then you must have the mortgage money as spare capital each month !
As you are paying 5% on the mortgage you would be better off overpaying the mortgage each month rather than saving.
But you also need to put say 1/3 of the rent money into a savings account/ISA for when the TAX demand comes from the Inland Revenue!!!
You cant stay Rent Free with mum and dad so thats another cost.