FD v OP

version2014

So here is the question over pay or save first direct 8% saver.

Mortgage 3.99% interest is calculated and added to mortgage daily

FD MS 8% interest calculated daily and added annually

What's best? The mortgage by adding the interest to the mortgage balance daily, the interest will compound over the year.

Will compound interest daily work out more than I would make saving with FD for 8% after tax is taken from the 8%????

bodmil

FD is 6% isn't it?

Lomcevak

Yeah, FD is 6% now unless you already have an 8% one open. see http://www1.firstdirect.com/1/2/savings/regular-savings-account?WT.ac=FSDT_CTA_SAV_REG1003

Decision depends on other factors too, e.g. tax rate? what else do you have in savings? how long does the mortgage have to run? what sort of mortgage is it (e.g. standard repayment, offset, IO, etc.)?, and more.

e.g. if you have no savings then better to build those up a bit before overpaying the mortgage, as OPs are effectively 'gone' once you make them - you can't get the money back if you need it unless you have an offset/CAM/etc. mortgage. But if you've already got a reasonable cushion of savings then mortgage OPs are a good option.

version2014

I have a 8% one!

I am trying to work out if the mortgage interest added daily which would compound...would mean it is better to OP mortgage than say with the monthly saver.

Is there anyway to work out the compound interest on the mortgage vs saving?