overpayment or saving

tpenthouse

Hi All,
Looking for some advice. I have been very lucky in that my current mortgage is 0.5% above BoE base rate for the life of my mortgage (was paying double the amount before the credit crunch, £850pcm now about £430pcm). I was wondering with the rate being so low just now should I overpay my mortgage or keep the money I was going to overpay and place it into a high interest savings account (currently 3.2% interest) - would I gain more money to pay off my mortgage sooner by placing the overpayment in the savings account or should it go into the mortgage account???

Anthony

[Deleted User]

Because of the very low interest rate on the mortgage you are much better of with your savings in a savings account.

If you don't already have one, set up an ISA.

HTH

D9

tpenthouse

brilliant. I thought that was the best thing to do but wanted to double check

holly_hobby

If you have a low risk/cautious ATR, and particularly as this is in respect of mge repayment, I would suggest looking at a Cash ISA, with SS ISAs being more appropriate to those with at least a medium risk profile (as they are an asset backed investment with capital investment exposed to loss ... as well as gain of course !).

Remember that due to the favourable tax status, investments into ISAs have an annual fiscal yr cap (running from 6 April to 5 April), with a Cash ISA having a max investment of £5640 for current fiscal yr 2012/13.

Any further investments you wish to make in excess of this amount, should be in mediums that are appropriate to your risk profile, and will provide a NET return in excess of your mge payrate - with on going monitoring of both your mge payrate to investment net return - switching the funds when your mge payrate becomes periliously close to investment net returns, and thereby the true benefit of retaining the capital negligible.

Hope this helps

Holly