Overpayment advice please

beanie414

Hi i have been reading these forums for a few years now and now seeking a little advice on what else i can do to be a MFW heres some details.
I have a mortgage with first active last years opening mortgage payment was £95,732.51 the rate was 1.60% since the fixed rate ended on august 2011 so now it gone to 0.5 above interest rates which will change as and if the rates change.
When this rate started the payments went down from £770 to £600 a month so i thought i would start from this point on to make overpayemnts so i arranged to make over payments of £200 each month which made it £800 in total so not far of what it was originally.
After a few months of doing that i looked at me and my wifes finances a bit and though hey since we are such a low rate lets try and pay off as much as we can so i increased over payments to £500 so paying a total of £1100.Have just got mortgage statment through and our mortgage is now £85,404.18 so its gone down £10000 in a year so not a bad start.
If we continue doing this we will be mortgage free in 7 years 4 months.What we are now wondering is it better if can make slightly bettter overpayments now whith whatever money we have at the end of the month maybe £100ish or more if i do overtime i do get regular overtime so can get an extra £200 - £400 a month .I put £100 into another account incase of emergencies or if we want to do something ie go to concerts which has £500 in it.
So should we just put everything we have at the end of the month into overpayments or are we going a bit over the top with them.if anyone has any good advice or tips on our situation ty in advance because im sure there are things we have missed or something we just havent thought of i think the light at the end of the tunnel may have blinded us.

Thrugelmir

If you can more interest than you are paying. By saving into an ISA for example. Then do that.

dimbo61

Hey well done on the overpayments but if you have any more spare money each month I would build up savings in cash ISA,s
Rates will one day go up so the more you can overpay now the better

beanie414

Hi ty for reply just wondering do you mean put all spare money into ISA or all the money that we have spare plus what we normally overpay each month into ISA.I did think about putting some money into an ISA but i thought the interest we did earn from asay a £6000 ISA is about £180 would be less then what we would save on the interest charged on the £85000 mortgage.If we did go the ISA route should we just keep on saving or use that moneyat the end of the year to use as a big lump sum to overpay?

Thrugelmir

beanie414 wrote: »

I did think about putting some money into an ISA but i thought the interest we did earn from asay a £6000 ISA is about £180 would be less then what we would save on the interest charged on the £85000 mortgage.

You need to calculate the amount of interest you'd pay on £6,000 of your mortgage (not £85k).

As long as you are earning more interest on your ISA. Leave the money there. Just pay your mortgage in the normal way.

Suggest you use an instant access one. So that the funds are available to repay your mortgage at any time. Should the need arise.

beanie414

OK ty for advice just need to clarify think im reading this right so i should put all the money that we would use to overpay which is £500 plus anything else we have spare at end of each month into an ISA which would pay roughly 3% a year instead of using any of out money as overpayments for the mortgage.I will have to read up on ISA a bit though cause i know theres a cap on how much you can save etc.