Using Natiowide Overpayment Reserve as a savings pot?

essexsi_2

Hi all,

Just after a bit of clarification that I am doing the right thing before going ahead.

Currently paying 2.88% on life time tracker. I am overpaying by about £260ish pounds per month that shows in my OP reserve. You can borrow this back at anytime.

I have filled this years ISA. I have built up a few thousand in instant access savings for emergencies and was looking at places to put this eg egg and AA both at 2.80%.

Would it be a better/sensible use of it to gradually pay the majority into the mortgage overpayment reserve and so get a better rate for it. I think the equivalent rate would be 2.88% + 20% as no tax to pay, so about 3.46%.

Is it as simple as that?!

Cheers Si

xrjtg

I'm not familiar with the product, but if things work as you described then yes, that's a sensible thing to do. It's actually slightly better than you thought: equivalent to 3.6% before tax, as the 20% is of the 3.xx figure rather than the 2.88. Do bear in mind though that there are various accounts that are paying more than 3.6%: some fixed term accounts, and the Lloyds Vantage current account, for example.

essexsi_2

Thanks for the reply.

So my maths was wrong, but in a good way!!

Looking around at the various savings accounts I was aware of the Vantage Account, infact I bank with LTSB so this would be easy to set up. However, there is a bit of faffing around with it and I think psychologically paying it into the mortgage seems better!

I really wanted to confirm I wasn't barking up the wrong tree!

Cheers Si

cloud_dog

Essexsi, it is that simple. Wer have a fixed rate mortgage, unfortunately on a higher rate than you and being 40% tax payers it is the best use of our spare/savings cash.

Also, they are very quick to pay you the money back, we've drawn money back out a couple of times for holidays and a car.

essexsi_2

Thanks for that cloud_dog. Nice to get reassurance from someone doing it !

Out of interest how long does it take to get money out if needed?

Cheers Si

cloud_dog

From the point of request it was less than 7 days and they transferred it electronically in to the account where the mortgage payment comes from.

essexsi_2

cheers cloud_dog.

I'm thinking of holding a few hundred in one of my current accounts 'just in case' then feed the rest gradually into my mortgage.

Thanks for your help. Si