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Overpaying v saving
Sim_2
Posts: 94 Forumite
We will not be MF for a very long time but I woke up a few nights ago and thought "Why am I overpaying a mortgage at 0.99% when I can get cash ISA rates nearing 3%" We have the option of paying interest only (First Direct) - interest would be around £120 a month, repayment target about £750 and we are paying £1000.
What would you do if risk was not an option?
What would you do if risk was not an option?
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Comments
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Invest where the returns are best so with a mortgage rate of 0.99% you can getter this with savings even after tax and instant access.
So little risk, if rates change you move it to the mortgage(subject to any limits).
ISA also have longer term benifits so with those you can take a slightly lower rate if keeping long term.0 -
getmore4less wrote: »Invest where the returns are best so with a mortgage rate of 0.99% you can getter this with savings even after tax and instant access.
So little risk, if rates change you move it to the mortgage(subject to any limits).
ISA also have longer term benefits so with those you can take a slightly lower rate if keeping long term.
Simply and succintly put!
SmileyGTarget acheived: _party_ Mortgage offset in June 2012!_party_Mortgage = -£98Endowment = £0Investments = £40,247[STRIKE]Deficit[/STRIKE] / Surplus = £40,149(at 22/09/2017)"Don't spend then save, save then spend!"0 -
Overpaying only makes sense if you will realise now, or expect to realise later, a better rate than saving. If your mortgage is 6% and the best savings rate you can find is 4% fixed, then it makes more financial sense to pay down your mortgage.
If those percentages are reversed, then you're better off saving.
If however on the reverse but you expect a change (like now, in our current economy), then who the hell knows. It depends on interest rates AND inflation rates AND where LIBOR might head AND AND AND...
Isn't Personal Finance FUN?Starting Debt: ~£20,000 01/01/2009. DFD: 20/11/2009 :j
Do something amazing. GIVE BLOOD.0 -
You are also best building up an emergency fund of 3/6/9 months of income in ISA,s for all life,s little problems ( new boiler, car, etc)
Your mortgage rate will GO UP so save for now and overpay when you can afford too. GOOD LUCK0 -
My mortgage rate isn't quite as low as the OP's rate. However, I have transferred 75% of my offset savings to an account paying 4.3%. Rather than overpay I save in a regular saver at 5%.
The difference between saving and overpaying will pay for a holiday.
GGThere are 10 types of people in this world. Those who understand binary and those that don't.0
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