Mortgage Question re ovepaying!

meaniegreenie

Hi

I have an offset mortgage currently at £35,000 interest rate 1.05% my questions is am i better overypaying now or waiting until the interest rate goes up as surely if i am paying now its coming down quicker than it would if rate say 2%, this is really confusing me as i read lots of posts on here telling people its a waste of time overpaying as rate so low but surely it would mean i pay more on my repayment and less interest IYSWIM???:rolleyes:

Thrugelmir

If can earn an after tax rate of 2% (for example) on your savings, then you are better off putting the overpayments into the savings account.

If not overpay the mortgage.

VIGILANT22

Thrugelmir wrote: »

If can earn an after tax rate of 2% (for example) on your savings, then you are better off putting the overpayments into the savings account.

If not overpay the mortgage.

and then what?...wait for the mortgage rate to go up and pay more interest???

Joe_Bloggs

If you make a choice then you chose to go down a path. If you want to decide which path to take then you have to rate the individual paths. Paying off debt if the interest rate is higher than the offset rate or higher than any savings alternative, should be considered a priority.

Paying into your offset accounts gets you 1% on the money you pay. If you were to put a lump sum into a fixed ISA for 1 year you could make around 3% thus an overall 2% gain. More if you could leave it in for longer. Perhaps less if interest rates start to rise and your offset mortgage rate increases.

As a starting point can you say what rate do you get for your savings at present. Shopping around and getting the best rates is not easy. Most of the best rates are for fixed amounts for a fixed period. Thus you have to have the money upfront and then be prepared to tie it up.
I have also seen ISA trackers that will increse if the Bank of England Base rate increases.

J_B.