Pay off portion of mortgage or save?

m_s

We recently paid off an endowment, worth just over £20k. We had intended to put it against our mortgage (currently paying 2.5% interest over 15 years), but are now wondering whether to put all the mortgage on repayment and put the £20k into savings instead. What do people think in general, and what recommendations for saving options if that makes most sense?

Lokolo

If you don't have any savings then its usually good to start there. Usually people suggest 3-6 months in emergency savings.

The rest you could choose to overpay, or save a little extra.

On a side note, you should make sure you also have long term investment/savings plan for retirement.

YoungBusinessman

I would keep it in cash as emergency fund, slowly add to it.

somethingcorporate

YoungBusinessman wrote: »

I would keep it in cash as emergency fund, slowly add to it.

Emergency fund should be calculated as an amount you'd need to cover 3-6 months of expenditure, no point in increasing your cash pile when it will do much longer in the long term invested in just about anything else.

Cash in savings account won't do much better than their mortgage rate so suggest once they have enough cash to cover 6 months then they should either invest via S&S ISAs or pay down the mortgage.