Mortgage overpayments or 5% saving plan?

[Deleted User]

Our mortgage deal has just run out so we have dropped to Nationwides lowest rate, which is 2.5% at the moment and allows us to make unlimited overpayments.
Question is should we be making big overpayments off the mortgage or should we put it into a 5% savings plan?
I've seen those calculators which predict how much we can see save and to be honest i think the overpayments is the way to go.

opinions4u

Unless you're a higher (50%) rate taxpayer then the regular saver is the way to go.

Pay the money to the mortgage and it earns you 2.5%. Pay it to the regular saver (5%) and it will earn a basic rate taxpayer 4% net and a 40% taxpayer 3%.

The Lloyds one allows withdrawals - so if the mortgage rate rises above the net rate you can then withdraw funds and send them straight to the mortgage account.

So, while the rate differential remains favourable, fund the regular saver and when it matures pile the proceeds and accrued interest in to the mortgage.