Mortgages : Overpay or Save for lumpsum?

siliconbits

I overpay my monthly mortgage by 20% and I was wondering whether it would be better to save for a lumpsum (and get interest on it) and pay instead when having to remortgage or move to another deal at the same bank. Thanks for any feedback.

dimbo61

Is there a reason you OP by 20% ? are you with HSBC which allow 20% OP,s each month without paying any ERC,s
You dont give your interest rate on the mortgage and what interest rate you might be able to get from savings in the bank!
As you will more than likely be paying interest daily ( please check) then the sooner you can overpay the better ( IE the day you get paid )

ChopperST

siliconbits wrote: »

I overpay my monthly mortgage by 20% and I was wondering whether it would be better to save for a lumpsum (and get interest on it) and pay instead when having to remortgage or move to another deal at the same bank. Thanks for any feedback.

It depends very much on your goals, do you have any savings already for a rainy day, if not buid up 2-3 months of income as a buffer would bew sensible.

What is the APR of your mortage? If that is more than the AER you could get on a savings account the simple answer is to overpay the mortgage. However like I say it depends what your other goals are and assuming you have no other debt.

siliconbits

dimbo61 wrote: »

Is there a reason you OP by 20% ? are you with HSBC which allow 20% OP,s each month without paying any ERC,s
You dont give your interest rate on the mortgage and what interest rate you might be able to get from savings in the bank!
As you will more than likely be paying interest daily ( please check) then the sooner you can overpay the better ( IE the day you get paid )

Is there a reason you OP by 20% ? are you with HSBC which allow 20% OP,s each month without paying any ERC,s
>>>>> I OP by 20pc to reduce my mortgage term. 20 pc is the maximum i can pay without ERCs. See https://mortgages.hsbc.co.uk/help/mortgages-explained/fixed-rate/
You dont give your interest rate on the mortgage and what interest rate you might be able to get from savings in the bank! As you will more than likely be paying interest daily ( please check) then the sooner you can overpay the better ( IE the day you get paid )
>>>>> Interest rate is a high 5.29 pc over 7 years (five more to go). I could put it in an ISA, that's 3.5 pc per year.

Let me know whether that clears out any misunderstandings

siliconbits

ChopperST wrote: »

It depends very much on your goals, do you have any savings already for a rainy day, if not buid up 2-3 months of income as a buffer would bew sensible.

What is the APR of your mortage? If that is more than the AER you could get on a savings account the simple answer is to overpay the mortgage. However like I say it depends what your other goals are and assuming you have no other debt.

I have a saving. So I guess it would be better for me to overpay.

dimbo61

You are doing every thing right at the moment by overpaying by the 20% each month and the only thing you might be able to do is find out if you can reduce the term