Flexible Mortgage

Huggy_Bear

Hi

I have a flexible mortgage with an interest rate of 1.49%
Monthly payments are £416 but I pay £800 so I can pay off loan quicker.

I'm I better off putting this extra £400 or so in a savings account at a higher rate then paying the amount saved + interest earned back into the mortgage?

Hope something can advise
Thanks:T
HB

northerner999

It is straight forward on whether you like security of knowing your loan is being paid off quicker (protecting you from future rate increases, which may not be matched in comparable increases in savings rates, and reducing your compound interest) or gamble on putting your money in savings accounts and ensuring this always pays you more than you pay in interest. You also have to be disciplined not to raid these savings. It is a personal preference.

It's hard to say without knowing more details about your LTV,earnings and any penalties for overpayment, I'm on a SVR and able to overpay as much as I want. I'm rebuilding up my savings pot after having to dip into it last year, but once that's done any spare money is going to my mortgage rather than savings.

My instinct is to pay down debt as quickly as possible, especially if you're knocking off an extra £400pm, but if you have an instant access savings paying more you can also accrue a significant amount of interest

michaels

MY mortgage (fully flexible, interest only) and savings are both about 250k. The mortgage costs 2.49%, the savings earn on average 4% (tax free in my wife's name, max 30 days access). You do the maths.