Pay towards mortgage or keep savings?

cheghead

Got £22000 (over 7 years) left on mortgage. Have a 'spare £1200' in savings account. Already paying extra £120/mth to get the mortgage paid off soon as. Should I use the £1200 to pay into mortgage now or will it be better left in savings account paying around 4%?

PoorDave

Hard to say without knowing the rate on your mortgage.

Having said that, you mortgage rate is bound to be more than 4%, so I would think having savings of 1200 @ 4% in savings would be worth less than taking the 1200 off your mortgage

selbmag

Plus you will pay tax on your savings interest while you wont pay tax on the interest you save on your mortgage.

Cara79

Although saying that, if you used the £1,200 to put into your mortgage, have you got any emergency funds available?

Would you be able to draw back down from the mortgage if the need arised?

I'm wondering how much to pay off my mortgage. I've got over £10k in savings and not sure how much to leave as emergency. Maybe £3k thereby paying £7k off the mortgage. I also manage to save around £400 per month so providing I keep a minimum of £3k emergency I should be fine.

I guess you know your own situation.
x

selbmag

Good point. Our mortgage is with Northern Rock and I can request "withdraw" any overpayments at anytime min £500. You call up and they send it to you as a cheque or BACS it same day so with you 3-5 days.

lilyann1

I was always told when I worked in financial services, that unless you have at least £5k or £10k spare, then it wasn't worth paying it off the mortgage as the reduction in monthly payments is negligable.
As said previously have you any spare funds for emergencies.
I'd keep that for a rainy day for the time being.

Andy_ArT_Trigg

I too have this "dilemma". Should it make any difference how much the amount is? What I mean is, if you have £1000 in a savings account, can it make enough to counteract the equivolent £1000 you have within your mortgage that you are paying interest on? (taking into account tax relief)

I just purchase £3000 worth of shares in Standard Life at the existing customer discount. It crossed my mind after applying for them that maybe I should have paid this off my mortgage instead? (I don't like risk btw - although I've made almost £300 already)