Mortgage Balance v Savings Balance

Jock_Tight

What category do the mortgage free wannabe members in this section fall into: (assuming you already have an emergency fund in place)

a) Overpaying mortgage as much as possible with nothing being added to savings
b) Digging into savings to overpay mortgage even more
c) Overpaying mortgage however also trying to build up savings

At the end of the day its probably down to your mortgage rate v savings rates however despite low savings rates are people still making use of their ISA allowances for the longer term tax benefit?

We fall into category C, as we are trying to balance between overpaying the mortgage as much as possible while still building up savings.

LilacPixie

We were A but i'm swaying towards C because a move on the cards so trying to get some accesable cash on the go for costs. I haven't bothered with an ISA this year as everything been going to the mortgage

jamesd

I'm in a different category: interest only mortgage being taken out when I could pay cash, so I can keep my invested money as high as possible and hope to be able to retire early while clearing the mortgage more efficiently than with overpayments.

I don't consider the mortgage in isolation and it doesn't look sensible to me to overpay when investments, on average, are expected to pay more than any mortgage interest rate. But this isn't for everyone, some would hate the ups and downs of investment value, or example.

Luv2Budget

I'm in the C category - as well as overpaying, I also save into an ISA. So in just over 2 years time when my fixed deal ends, I will pay a lump sum into my mortgage.

Joe_Bloggs

I am at first trying for mortgage neutral before mortgage free. Once I have close to my mortgage balance in savings then maybe I'll diversify to other means of making money from money. I continually appreciate the insight of jamesd. I am confident that I do not have brains to compete with others in a global 'free' for all contest of wits as to where to put money for gain.
J_B.

PParka

Mostly 'c' for me...
... Overpaying the mortgage (and offsetting)
... Paying into Cash ISA, S&S ISA, Pension etc.
... Using the Lloyds Vantage accounts to get 4% on my savings
and still Stoozing to offset even more.:D

Initially I was putting everything into the mortgage, but my tracker rate is quite low so I'm slightly better off with savings at the moment.

Jock_Tight

PParka wrote: »

Mostly 'c' for me...
... Overpaying the mortgage (and offsetting)
... Paying into Cash ISA, S&S ISA, Pension etc.
... Using the Lloyds Vantage accounts to get 4% on my savings
and still Stoozing to offset even more.:D

Sounds very similar to me!
... Overpaying the mortgage (100% offset)
... Paying into Cash ISA, Pension (looking into S&S ISA as well)
... Lloyds Vantage accounts for the 4%

Each time we make a mortgage/over payment we take the equivalent out the offset account and put into savings accounts then use our ISA allowance (fixed rate) each year.

wynnvegas

I'm a hardcore A fan here. It makes a lot of sense for us to be C as well as our mortgage rate is 1.39% at the moment but there's no amount of money going to beat the feeling of not having a mortgage....

Cheers,

Billy

Jock_Tight

wynnvegas wrote: »

I'm a hardcore A fan here. It makes a lot of sense for us to be C as well as our mortgage rate is 1.39% at the moment but there's no amount of money going to beat the feeling of not having a mortgage....

Agree!

My head says save more but my heart says get rid of the mortgage!

Thats why we are in C which will see us mortgage free in ~2 years but with a reasonable savings balance at the same time.

RosieTiger

We are in C, but have also used some savings to bring mortgage down too - does that make us a little of everything ??
The issue I have with this conundrum is that my head might say save and heart say overpay the mortgage, but my head also tells me that the difference between the two is almost negligible in real world money - hence the temptation to remove savings and enjoy the thought of watching our lenders faces when personally handing over the final payment appeals !

LittleMissAspie

Option D - offset! So it doesn't really matter as all our accounts are linked to the offset. Our regular payment includes a slight overpayment, then we are also building up savings which will eventually be used to pay the mortgage off, but we have the security of being able to access them any time.

It's a new mortgage and we chose a fixed rate so I don't think there are (m)any savings around with a higher rate.