Overpay or save for new deposit

whereschris

Hi,

I have a lump sum that I would like to pay towards my mortgage. I m limited to £500 overpayment a month so would have to do it in monthly £500's. I have virtually no savings apart from this sum but of course this money is making very little in the building society. I have very helpful parents who always encourage me to pay the mortgage off rather than save as they say they will always help out if need be.

My dilema is, we would possibly like to move house in the not to distant future but would have no deposit other than what is in our current house. Would this cause a problem? Is it better to have some kind of cash deposit?

Thanks

somethingcorporate

No, it would make almost no difference. Assuming you have sufficient equity in your house.

GMS

If you sold your current property in order to move then the surplus funds between sale price and mortgage would be the deposit. If you decided to rent the current property and purchase another you would need to find a deposit either in the form of cash or by way of releasing equity from the current property.

whereschris

We have a fair amount of equity in the house (I hope)...... Ultimately then I would save much more by paying off my mortgage which is a 4.39% than save. Is that the right idea?

whereschris

GMS wrote: »

If you sold your current property in order to move then the surplus funds between sale price and mortgage would be the deposit. If you decided to rent the current property and purchase another you would need to find a deposit either in the form of cash or by way of releasing equity from the current property.

I guess that is what I am slightly worried about. Sales in my area are poor to say the least so it would be a possibility but that said, our deposit would be fairly small.

ViolaLass

You should make sure you have an emergency fund first - up to 6 months salary.

Thrugelmir

whereschris wrote: »

Ultimately then I would save much more by paying off my mortgage which is a 4.39% than save. Is that the right idea?

If moving is your aim then overpaying your mortgage is the right thing to do. Even if you don't move for a while it will save you money in the longer term.

whereschris

Thanks all.