The best option?

Busyday

Firstly hello, I have been a long time lurker on here and picked up plenty of tips so thank you for that! My question is:

I am currently on a the Halifax SVR on my property, I've had the mortgage for 6 years and I've been on interest only for the whole period due to some debt that I had, I am almost at the end of my unsecured debt of what was about £45k during this period I have managed to rebuild my credit rating by being sensible. We would now like to move house to be closer to our family. My monthly mortgage payments are £508 my house is worth about £170k and I owe £170k but now or very soon I will be £2500 per month better off once the debts are paid, i have some savings and the flexibility to live so do I:

A) Overpay my mortgage by £2500 P/M

Save £2500 per month as a deposit for another house

Feedback and advice welcomed

go_cat

You will need a deposit plus enough money to pay for stamp duty, solictor fees, EA fees, mortgage fees if applicable etc

I would advise start saving if you can

Busyday

Thank you for the reply I have savings to cover the fees, stamp etc..

go_cat

In which case I would save towards a deposit rather than paying off your current mortgage so you can get the best LTV

Thrugelmir

Unlikely you'll earn as much interest on your savings as repaying the mortgage. So if this is the case pay down the mortgage.

The new mortgage may well on a repayment basis so get used to paying out a higher amount.

Busyday

go_cat wrote: »

In which case I would save towards a deposit rather than paying off your current mortgage so you can get the best LTV

Thank you, looking at it from the Halifax's perspective though would it be an easier decision for them to lend to me if i am already paying them £3k per month, although I'm on the straight and narrow with the credit bureaus I do have some previous for some late mortgage payments a couple of years ago

Morgage_Confused

I dont understand why people are suggesting for you to save the money.
Pay down the mortgage m8.

You would only save the money if you can get a better saving rate than your mortgage rate, which is unlikely.

Also equity and deposit is the same thing when you move house.

Thrugelmir

Busyday wrote: »

A) Overpay my mortgage by £2500 P/M

Your mortgage is interest only so at the moment you're not even paying it back.

Your repayments with 19 years to run need to be higher than a £1k at month at the very least.

dimbo61

So why not save into a cash ISA each month £5340 allowance ( each) and then pay say £2000 a month off the mortgage debt.
This shows the Halifax that you can now afford a bigger mortgage and in 12 months you will have paid £20/24K off the mortgage debt plus £10K plus in ISA,s