Help - Best way for MF 28 January 2010 at 11:53AM edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe 3 replies 677 views

jcl1

Hi all,

I only dscovered this website the other day but have found some great tips already! Thanks all!

I have read back through many posts to see if anyone in a smiliar sitation is wondering the same but cant find an answer, so hoping someone here can help.

My partner and I bought our first house in May last year, purchase price of £175k mortgage of £139k. At present we have mortgage outstanding of around £135K. Its an offset mortgage with currect interest rate at 2.39%, we have around £45k in savings offset against this and monthly mortgage payment of £650 a month.

We can afford to start overpaying on mortgage as well as continue saving. Looking to overpay by £300 a month.
We are looking to stay in this house for roughly 5 years.

My question is - is this the best way to go i.e. overpaying and saving? And is upping the current standing order for mortgage by £300 a month the same as making a seperate overpayment?

Any help greatly aappreciated.

Jo.

sassyblue

Hi Jo, welcome to the boards and good luck on your mortgage free journey!

As far as l can see you are better off making OP's into the mortgage account unless you can get a better interest rate than 2.39% on your OP figure (£45k)

Upping the standing order is the same as making a separate OP.

We have an offset mortgage and we don't bother with savings as such (although we've both got shares) because you can draw the OP's back. It's lazy of me l know but l really can't be bothered chasing savings accounts with interest rates so low.

dimbo61

Wether you overpay or top up the offset account the effect will be the same.
Now a few years ago we had money in the offset acount saving us the mortgage cost( in interest) each month.
When ISA,s went up to 6% we put some of the offset money into ISA,s
Now rates are lower than our mortgage rate ( long term fix) we have taken the money out of the ISA,s and put it back into the offset account.
Some ISA,s now paying 3% tax free so consider filling your ISA allowance !

jcl1

Thanks for replies guys, good to know we are on the right track. Could really do with a comprehensive guide to first time buying/mortgaging/budgeting etc, there is so much to think about! (Although by the looks of it I can find most of that on here!)

We did the same with an ISA but will have to look into it all again to see if we could be any better off, thanks for that.