Am i silly??

Giraff

The wife and I have very little in savings but have been overpaying with our spare cash instead of saving an emergency fund. (we have £1k in savings) Am i doing the right thing overpaying £350 a month?
We have no debts 6 years warranty on boiler etc so i havent seen the need to save. What would most of you do?

1. Keep over paying
2. Stop overpaying and build up savings
3. do 50/50

dshart

I think the general response on these forums is that you should have around 6 months savings as an emergency fund, after that start hitting your mortgage debt. What you need to consider is what would happen if you were lost your job or were off sick for a while, you may not find it as easy to borrow back from your equity. I would say your best options to consider are option 2 or 3.

Brighton_belle

I would definitely build up a 6 month emergency fund. Emergencies are just that - unexpected. Illness and redundancy can strike without warning. Or your boiler fails and the warrenty turns out to be useless etc etc.
I would build up the fund first then go back to overpaying the mtg.
If you can't face that, do 50/50.

DannyboyMidlands

It depends on the interest rates on your mortgage and your savings.

For example, I could overpay my mortgage but the IR is below 3%. I can get nearer 5% after tax on my savings so best to stick the money in there. Also has the advantage of being there if I need it.

Either way I think you should stop overpaying for a while and build up an emergency fund of say £5k.

Twiddy

If you can access your overpayments and have overpaid for a considerable amount of time I would be inclined to say that your emergency fund is already saved. We're offsetting and our emergency fund is being offset against the mortgage.

If youo cannot access your overpayments then yes you should really think about a good savings vehicle to build up an EF.

Cheers
T

originalmiscellany

Can you access the overpayments in an emergency? If you can, keep on overpaying. If not get some savings... You can put it in an ISA, which if you have to pull out, you lose the interest, but if you don't, then you will have some extra for your savings.

Giraff

i could get it back out but i would hate to see the mortgage balance back up.
Think im going to stop overpaying for 6 months and build the emergency fund. The only problem is im a little addicted to overpaying!

dimbo61

Do the 50/50 thing then and make sure you are getting the best rate for your savings

dorisday

As the mortgage is a debt I would keep up with paying as much as you can off and as youve said you could stop paying for a while if an emergency arose. Dont forget interest on your mortgage may be low but it can at any time rise quite steeply. There are no guarantees either way. Best to clear debt first.