Mortgage versus savings - advice needed

torla

I have a flexible mortgage (borrowed in Dec 2006, £103,500 with 21 years and 9 months remaining) with A&L. My current interest rate is 1.49% The mortgage is interest only. My current situation is. Oustanding amount is £73354. Available credit in that account is nearly £30K (hence £73354 + £30,000 = £103,330 approx) which I can use as I please without penalties. I pay £400 per month (and can pay more) and costing me £90 per month interest on the mortgage. I have no other debts. My ISA is covered for this year with A&L I have other savings too with A&L but not paying much interest around .1% (£3000). I also have the Direct Premier Account currently paying 5% AER on the first £2500 but have in excess of that figure. I am a low tax payer.

My question is should I pay more into the mortgage or find a regular savers account or some other savings, bonds etc? I have no knowledge of boands etc. I am not much of a risk taker and feel safe to know I can get my hands on the money in case or emergency.

Regards

opinions4u

Find easy access savings accounts, regular savers that allow withdrawals and isas.

To scan the market look at www.moneyfacts.co.uk/savings.

I would also suggest www.cheltglos.co.uk/savings for a 2.7% ISA, Norwich and Peterborough for a 4% regular saver (check out the T&Cs on easy access as I haven't) and also www.theaa.com/savings for a 2.8% easy access savings account.

Keep monitoring all the net rates against your mortgage rate. If the mortgage rate moves higher than the net savings rates then it's either time to move the savings to a new provider or pay down the mortgage debt.

Assuming no change in rates, drawing down £30k and sticking it in the AA account will cost you £447 a year in interest but earn you £672 after tax. A rather nice profit of £225 for 10 minutes work.