overpay or save

mongo81

I'm looking to move house within the next 6 months and was wondering if it is better to carry on overpaying my mortgage (approx 500 a month overpay) or to save this money and use it as a bigger deposit

Thrugelmir

Do you have the necessary funds in cash to pay the deposit on the new property ? i.e. 10% of the purchase price.

After that its a question of where the best return can be achieved. On savings or paying down the mortgage, depending on the respective interest rates.

mongo81

the deposit for the new house will come from the sale of current house which will be about a 30% deposit

Thrugelmir

You'll need to find a 10% cash deposit on exchange of contracts. (Though the figure can be lower with the agreement of the seller).

Seven_Summers

If you have an offset mortgage with a drawdown facility then plough as much into it as you will be saving on the interest rate but still have instant access back should you need the funds.

Otherwise if you can get better interest rate on a suitable savings account then put it in there.

If you plan to move in 6 months it is always prudent to keep some liquid cash for costs etc.

moneysavingmanc

Can anyone explain ifset mortages with a draw-down facility pls. as I'm in a similar situation as mongo81....

Want to move in 6 months - 1year. Current mortgage of approx. £100,000 at 4.19%. Have 10% LTV at the moment. Have £20000 in saving that I'm too afraid to pay into the mortgage incase we can't sell! If we couldn't sell, we'd look into renting our property and using our savings for a deposit for our new home.
I'm a little lost when it comes to ofset mortgages. Is the amount in the linked savings account counted when calculating the LTV %?

Would appreciate any help.