£72K mortgage left on lifetime term tracker rate of 1.69%

evoke

I've currently got £72K left on a lifetime term tracker rate of 1.69% (BoE base rate + 1.19%). I think this is a good rate. Would it be sensible to avoid switching provider and just overpay on this mortgage to reduce the term? I'm struggling to find a better interest rate at the moment.

opinions4u

Rather than overpaying to the mortgage, make the overpayments in to an easy access savings account paying more than 1.69%.

Halifax cash ISA pays 2.8% tax free.
Post Office were paying 2.9% gross, 2.32% net last time I looked and Nationwide seem to have a slightly higher rate allowing one withdrawal.
Lloyds TSB monthly saver pays 5% and allows withdrawals.
First Direct regular saver pays 8% but doesn't allow withdrawals.

Paying off the mortgage saves you 1.69%. Saving should, at the moment, earn you more than that.

Make sure this money is "ringfenced" as mortgage money, keep an eye on the rate differential between mortgage and savings account (espeically if the savings account has some form of bonus rate included) and as and when mortgage becomes more expensive than savings then pay the lump sum off the mortgage.

I wouldn't consider switching provider, in your circumstances, in the current climate.

evoke

Okay, thanks for the advice. That makes more sense.

dimbo61

This is a repayment mortage ?

evoke

Yes, it's a repayment mortgage.

hillcats

We are in a similar position as you, we however have chosen to overpay directly to reduce our balance on a monthly basis, I must admit though it is sensible advise about finding a higher interest paying account, but we (well, I) like to watch the outstanding balance dwindling.