Overpay or Save?

gazfocusgazfocus Forumite
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A bit of advice and also a bit of a favour from you mortgage brokers :)

Firstly, the advice. In general, is it best to overpay a mortgage or to save the extra money somewhere? I currently have a cash ISA with Barclays which is 3.05% AER. Mortgage rate will be 5.69%

I know in terms of percentages, it will be more beneficial to overpay but the option won't be there to access the money back should we have an emergency.

Now to the favour.... :)

Can any of you kind mortgage brokers/advisors have a quick look at Leeds BS's 'Shared Ownership Fees Assisted' mortage (number two on http://www.leedsbuildingsociety.co.uk/mortgages/ratesfirst.html) and see if you can find out whether they allow overpayments or not? Our mortgage advisor is out of the office now until next week so can't check with him.

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  • ThrugelmirThrugelmir Forumite
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    gazfocus wrote: »
    I know in terms of percentages, it will be more beneficial to overpay but the option won't be there to access the money back should we have an emergency.

    Build an emergency fund first. Then overpay.

    If moving house is a priority then make real sacrifices to pay down the mortgage quicker. In order to build more equity.
  • gazfocusgazfocus Forumite
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    Thrugelmir wrote: »
    Build an emergency fund first. Then overpay.

    If moving house is a priority then make real sacrifices to pay down the mortgage quicker. In order to build more equity.

    Thanks. Moving house isn't on the horizon (we're just in the process of buying our first house), but our aim is to pay the mortgage off as quickly as possible so we can buy further shares in the house (shared ownership).
  • ThrugelmirThrugelmir Forumite
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    Decisions need to be made with a balance in mind. Little point in having no savings then having to use a credit card to fund emergency expenditure.
  • gaz141gaz141 Forumite
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    gaz, Leeds do not allow overpayments on that mortgage
  • jghjgh Forumite
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    I always aim to budget 10% of housing costs (mortgage, insurance, gas, elec, water, etc) as reserves. Anything left over after that should go to paying off debts, most expensive (ie, credit cards, etc.) first.
  • armourarmour Forumite
    311 Posts
    Have you considered an offset mortgage? You could overpay AND borrow back.
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