Nationwide Mortgage

littlerose12345

Hi All

This has probably been asked several times before.. we are currently on Nationwide's 2.5% BR after coming out of our 2 yr fixed in December.

We paid in a lump sum in January which took 10 years off our term.

We are in a position to over pay at the moment and also have some savings in other accounts and an ISA. THe ISA pays 3.1% (nationwide e-isa)

Is it best to keep some of our savings in the ISA or plough it all into overpaying the mortgage?

dimbo61

Yes keep some of your savings just in case!!! Up to £16K
You are earning more in your tax free ISA than you pay on the mortgage so at the moment your better off building up savings in cash ISA,s and just make your normal monthly mortgage payment

themull1

I would pay it off the mortgage, because the interest you will save over the term of the mortgage will be more than savings in an ISA.

dorset_nurse

It makes very little dfference- but if you are paying higher tax rate on your income you would be better off paying off the mortgage.
Look at http://www.moneysavingexpert.com/mortgages/savings-vs-mortgage-calculator
I would personally get the mortgage out of the way first while the rates are as good as they are. Especially if you have a lot left to pay off.

bzd

With the savings being in an ISA it makes it easier to calculate. Whilst the interest on the ISA is more than the interest on the mortgage, you make more money putting into the ISA than you would save by paying that money into the mortgage (so long as you're making the required monthly payments).

As soon as the reverse is true you should start paying off the mortgage. You could take (nearly) all the savings out and pay off a huge sum on the mortgage (so long as you're still on a flexible BMR mortgage). I would always leave at least some in instant access savings for emergencies. Theoretically you can ask Nationwide for any overpayments you've made on the mortgage back so you have access to that money still. The only non-reversible thing would be that it would take time to build up the ISA again (if it's become over the yearly allowance).

So in short, pay into the ISA until interest on mortgage is more than interest on ISA and then pay that amount into the mortgage.

Cheers,

Ben