Save a deposit or increase equity

mattybryan_2

Hi There

I am looking for some advice about what to do with regards to my current mortgage and future situation.

I am looking to move within the next 12-24 months to a bigger property. I currently have a £87k mortgage on a £97k value property.

I am saving each month to create a deposit but want to know whether it is worth transfering these savings and overpaying on my mortgage each month to create a greater amount of equity in my property for the sale.

My reason for thinking this is I am making relatively little interest on the amount in savings and by overpaying on my mortgage would take capital off as oppose to interest, incresing equity that could be used as the deposit on the new property.

Am I thinking along the right lines, or is a cash deposit always best?

Thanks
Matt

kingstreet

What's the mortgage rate?

Still in an offer, like a fix? If so, what's the follow-on rate when it ends?

Is the mortgage portable, allowing you to transfer the rate to a new mortgage with the same lender when you move (subject to usual qualifying criteria of course)?

mattybryan_2

I am on a standard variable rate mortgage with RBS at 4%.
I am not fixed into anything and defaulted onto this rate at the end of my 2 year tracker.
I do not think that the mortgage is transferable, but I will look into this.
I'm assuming that if it is transferable its worth overpaying as any additional capital cleared will reduce the amount I need to borrow for the new property.

Thrugelmir

You'll achieve a better return on your money by overpaying the mortgage.

When you move house you'll need to bridge the gap. So whether its savings or equity makes little difference.