Not sure what's best

Andrea75

I've managed to save about £10k over the past few years which is currently sat in an ISA and I've got about £1K each month to either overpay the mortgage or put into savings.

I don't know whether to keep the savings or put it all on the mortgage and the same with the £1K.

It's good to have a savings pot but it will take a nice slice off the mortgage so I'min a bit torn in the best thing to do.

Thanks for any advice.

Calfuray

If the 10K is all the savings you have, I would keep it (or the bulk of it) as an emergency fund, and then see about OPing. Also, have a look at your mortgage T&Cs, is there a limit to the overpayments you can make? You may be lucky and be able to pay the 1k off every month, or you may have to put some away in savings due to necessity. Also, pension?

argomatt

Hi Andrea,

The general consensus seems to be to keep an emergency reserve saved up in an ISA and then repay anything extra to the mortgage.

Of course this all depends on the relative interest rates for your savings and your mortgage and also any restrictions on overpayments on your mortgage.

If you have the details of your mortgage interest rate, amount and term remaining, you can use the overpayment calculator to work out how much you would save by making overpayments to the mortgage.


Edit: Sorry, I didn't see Calufray's post when I wrote this!

Andrea75

Thanks guys. I have no overpayment restrictions and I have a pension. I will check the calculator, I guess they're all the same.

This is all very complicated.

Calfuray

Don't be disheartened, it's not too complicated

You have a nice egg nest for emergency fund, so looks good, you are all set up.

Who is your mortgage with? One of us might now how you can go about making OPs.

Beckyy

I would OP the £1K per month, and keep the £10K in savings, but that's based on my situation. What is your interest rate, and remaining term/sum on your mortgage?

Andrea75

Thank you, i'm with Halifax. I'm very tempted to overpay the £1K to get the debt down a little bit. Interest is 3.99% and £130k. Seems like the extra payments can only do good and I still have the savings to fall back on

bownyboy

Overpaying £1k a month will have a big impact on the mortgage balance and cut years from your term. I overpay by £500 a month and combined with my regular payment of £818 my balance always goes down by £1k a month which is good psychologically!

Play around with the mortgage spreadhseets on this forum to see how it affects your term.

Good luck!

Andrea75

bownyboy wrote: »

Overpaying £1k a month will have a big impact on the mortgage balance and cut years from your term. I overpay by £500 a month and combined with my regular payment of £818 my balance always goes down by £1k a month which is good psychologically!

Play around with the mortgage spreadhseets on this forum to see how it affects your term.

Good luck!

Giant...i'm impressed. You've reduced your mortgage considerably over the past 4 years! Is that due to your £500 monthly overpayments?

bownyboy

Andrea75 wrote: »

Giant...i'm impressed. You've reduced your mortgage considerably over the past 4 years! Is that due to your £500 monthly overpayments?

Thanks. I've only been overpaying since January 2011, before that the balance hardly moved in 18months, which was a bit of a shock.

I've also made 2 larger overpayments in last two January's as my mortgage allows 10% of outstanding balance in Jan as well as up to £500 per month.

I've set up a standing order on 1st of each month direct to my mortgage account, you can do this with most online banking, you just need sort code and account number from your mortgage provider.

Andrea75

bownyboy wrote: »

Thanks. I've only been overpaying since January 2011, before that the balance hardly moved in 18months, which was a bit of a shock.

I've also made 2 larger overpayments in last two January's as my mortgage allows 10% of outstanding balance in Jan as well as up to £500 per month.

I've set up a standing order on 1st of each month direct to my mortgage account, you can do this with most online banking, you just need sort code and account number from your mortgage provider.

Wow, that really is excellent progress. It looks like the way forward as your balance shows.