Best Approach to Savings

ebs1980

Hi

I'm new to this so sorry if this is in the wrong place.

Just wondering what people think is the best approach for me to take.

I have £25K of money currently in a savings account with another £8K in ISA (this years allowance already in).

I have a mortgage of £130K currently on a fixed rate 3 yr plan.

I'm just after advice as to whats the best thing to do with the £25K, is it to keep it in my savings account where i'm currently getting 2.4% interest or to invest elsewhere!?

Ta

opinions4u

Keep a contingency fund of 6 months net pay in an easy access account (eg www.theaa.com/savings at 2.80%).

What rate do you pay on the mortgage? What is the most you can repay without paying a penalty?

ebs1980

Currently it's 5.65% until 2012.

In terms of overpayments i can avoid charges providing that it's more than £500 and the amount repaid isn't more than 10% of the amount owed.

opinions4u

ebs1980 wrote: »

Currently it's 5.65% until 2012.

In terms of overpayments i can avoid charges providing that it's more than £500 and the amount repaid isn't more than 10% of the amount owed.

In that case I'd overpay by £500 a month assuming you have no other debt that is more expensive.

Take a look at sites like www.moneyfacts.co.uk/savings to identify other options for saving though.

DiggerUK

ebs1980, O4u is right.
Other reason to pay off as much as you can, is to make sure you have the highest possible equity in your property when you have option to remortgage.
Lending criteria is tough now, chances are it will be even more stringent in 2012.
As to interest rates, pick a number......
Best of fortune.