Overpay or Savings / ISA?

MagicCats

Now I've got my mortgage offer, contracts sorted and a moving date, my partner and I are thinking of our next step. Most of our savings will be gone with the deposit and fees so we are going to want to start again ASAP after moving.

We have played around with the overpayment calculator and it's obvious overpaying is a sound idea. However are we better saving into a regular saver, ISA or doing a straight overpayment? Or splitting the savings between overpayment and savings to give us an instant access cushion? (Taking into account the ISA restrictions)

We have a 90% LTV at 5.59% which is not great, granted. But we felt it better to get on the ladder and overpay / save and own a home than continuing to pay a landlords rent. Either way we are paying someone the same amount of money - current rent is the same as our new mortgage.

Rent £600
Mortgage £610

Any input appreciated, even from Thrugel'

katejo

MagicCats wrote: »

Now I've got my mortgage offer, contracts sorted and a moving date, my partner and I are thinking of our next step. Most of our savings will be gone with the deposit and fees so we are going to want to start again ASAP after moving.

We have played around with the overpayment calculator and it's obvious overpaying is a sound idea. However are we better saving into a regular saver, ISA or doing a straight overpayment? Or splitting the savings between overpayment and savings to give us an instant access cushion? (Taking into account the ISA restrictions)

We have a 90% LTV at 5.59% which is not great, granted. But we felt it better to get on the ladder and overpay / save and own a home than continuing to pay a landlords rent. Either way we are paying someone the same amount of money - current rent is the same as our new mortgage.

Rent £600
Mortgage £610

Any input appreciated, even from Thrugel'

In your situation i would first put enough money aside so that I had a cushion of at least 3 months take home salary in case of emergency. i would then start overpayments on the mortgage. I am single. Perhaps you two could agree that one of you would make overpayments while the other would pay into the ISA. It depends how much cash you have after paying the mortgage and everything else.

MagicCats

katejo wrote: »

In your situation i would first put enough money aside so that I had a cushion of at least 3 months take home salary in case of emergency. i would then start overpayments on the mortgage. I am single. Perhaps you two could agree that one of you would make overpayments while the other would pay into the ISA. It depends how much cash you have after paying the mortgage and everything else.

Your line of advice is something we've looked at. I guess it comes down to what interest returns are better etc?

Thrugelmir

MagicCats wrote: »

Any input appreciated, even from Thrugel'

:beer:

While overpaying is attractive.

Any saving evaporates if the fall back is the dreaded credit card.

So learning to save and then spending. Is a habit worth acquiring.

Over time I would target more 3 months in reserve.

dimbo61

Buying your first place? and paying for all the little extras that people forget to mention when you move in costs money so build up savings first.
Once you have 3/6 months on income in cash ISA,s then overpay the mortgage with any spare money

MagicCats

Thrugelmir wrote: »

:beer:

While overpaying is attractive.

Any saving evaporates if the fall back is the dreaded credit card.

So learning to save and then spending. Is a habit worth acquiring.

Over time I would target more 3 months in reserve.

That's v.true As it happens we will be in a position whereby our current C/C balance (£<500) will be gone, and we won't have to rely on any credit for furniture etc which has changed the game.

So in that position we're looking to start out on the right path. I'm not saying we won't ever have debt, but it will be for the right reasons.