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recommended rate of over paying mortgage?

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
4 replies 852 views
de1amode1amo Forumite
3.4K Posts
edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
İ am considering starting to over pay my svr interest only mortgage and was looking for some pointers as to a reasonable percentage of total income i should 'invest'--i save about 50pc of my income after all bills and living--i have savings for a rainy day in an account that cant be matched in the uk--i dont scrimp in life but i watch my outgoings -i have a teenage daughter!!i am 47 and content in life--just dont want to get to 70 and have the final demand for the mortgage!-i am secure on pensions and usual future planning--i get 8pc on my savings but worry about foreign exchange fluctuations with putting all my money abroad
mfw'11 No68- 55k mortgage İO--little to nothing saved! i must do better.

Replies

  • dimbo61dimbo61 Forumite
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    Use " whatsthecost" website to work out how much it would cost each month to change your IO mortgage to repayment over say 18 years ( 65!) and then overpay by that amount each month if you can afford to.
    You dont give the Interest rate on your SVR mortgage but if its alot less than the 8% TAX FREE ! you are getting from your savings abroad then you may be better off building up the savings.
    Just keep a carefull eye on rates !
  • de1amode1amo Forumite
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    i pay 2pc on my svr ---the rates abroad have been as high as 19pc-this is low now--i pay tax on them of the local rate-15pc-its the currency risk element i am adverse to with totally commiting my savings abroad-even at this rate- i dont see value in uk savings accounts!
    the site sounds interesting--its getting a gauge ---i am a careful investor and want balance
    mfw'11 No68- 55k mortgage İO--little to nothing saved! i must do better.
  • JonbvnJonbvn Forumite
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    de1amo wrote: »
    i pay 2pc on my svr ---the rates abroad have been as high as 19pc-this is low now--i pay tax on them of the local rate-15pc-its the currency risk element i am adverse to with totally commiting my savings abroad-even at this rate- i dont see value in uk savings accounts!
    the site sounds interesting--its getting a gauge ---i am a careful investor and want balance

    If you are a UK resident for tax purposes, you may be liable for UK tax on your overseas savings account.

    You are correct that currency risk is far more important. As an example sterling depreciated 30% against a several currencies over a period of a year. This reverse could occur very quickly.

    With the interest rate you mention, the currency you are saving is likely in a country with high inflation. This means your savings are probably high risk.

    I'll give you an example. I worked in Turkey for a year. The local staff use to get two increases per annum of around 15%, just so that their Lira salaries kept pace with the equivalent US$ amount.
    In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot:cool:
  • de1amode1amo Forumite
    3.4K Posts
    i just fiddled with that site and got the total interest on my svr would total 19913 plus the original loan of 55000 at current rates--and saving all my exccess here at 3pc for the same term would give me 315000
    240000 if you subtract the mortgage.
    but saving all of my left over income abroad would give about 634000--at a very conservative interest rate for Turkey!!-the tax position i have covered!!-a no brainer if you like risk!!!
    mfw'11 No68- 55k mortgage İO--little to nothing saved! i must do better.
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