save or pay off mortgage ?

MadDog2012

i have recently had two endowments mature to the tune of £47k.
i have a fixed for term mortgage of 0.17% above base (0.67%)on a mixed interest only and repayment, to cover the shortfall from the endowment policies.
i am unsure whether it would be better to pay off the capital of the mortgage or save in a long term savings account.
any advice out there ?
Thx in advance

Wh05apk

I would imagine you could quite easily get a cash isa/savings account paying better than 0.67%, if so that would be best, unless you would feel more comfortable clearing the mortgage?

MadDog2012

thx for that.
the problem is i am a higher rate tax payer with my ISA entitlement used up already, so i am not sure whether it is tax efficient to save !

marathonic

Even at a higher tax rate, you'd be better off with a good savings account.


http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#fixed

I'd go for one of the 5-year fixed rate accounts but you can go for a shorter term if you're worried about rates rising significantly sooner. Personally, I think they'll stay at, or below, current rates for at least two years and will then creep up slowly.

harvey115

You can try some fixed term savings and some regular savings that pay good enough interest rates to meet the higher rate tax bracket.

Say if you have fixed term savings account for a couple of years with 4% interest rate and with your Higher rate tax bracket you will still be getting 2.4%.

Regular savings accounts are available with good rates:
First Direct 8% - £25 to £300 monthly
HSBC 8% and 6% - £25 to £250 monthly
Some more building societies 5% - £25 to £250 monthly (it varies)

Summary:
Fixed term savings - you can put in any lump sum savings that you currently have
Regular savings - You can pay in monthly and stay on a good rate as well

Hope this helps.

getmore4less

What are you doing with your other surplus income?

To better your current motgage even with 40% tax anything over 1.2% will do.

There is a risk if you go with a fix that has withdraw penalties, easy/instant access or a variable rate that are likely to up if inerest rates do.

Should be possible to get over 2.5%

Thrugelmir

Pay some money into your pension pot.