11K Savings what to do with them?

Uvbntangoed100

I have a 49k mortgage current rate 3.19% for 5 years fixed.
I am allowed to overpay up to 10% a year on it if i want.

Should i overpay mortgage with my savings?

Or do i put the savings in an ISA paying around 2% maximum?

Or open a savings account and pay some into the savings account for 4-6% interest, obviously would be taxed 20% on this though, and only for 1 year probably at these interest rates.

I do need access to the cash as if i am off work for any reason would need extra as only statuary sick pay.

Any advice would be appreciated,
Thanks

Hominu

If you can get 4 - 6% on your savings then I'd go for that, as it'll generate more interest (even after BRT) than the mortgage is current costing you.

Anything less than 4% and I'd put 10% extra into the mortgage as a lumped sum. I'm guessing its a Nationwide mortgage, so you can always withdraw the excess that you have paid, should you need it for anything else.

jimjames

If you need access to the money then make sure any repayments to your mortgage can be taken out again. Some banks allow this on certain mortgages and not on others.

bigadaj

Uvbntangoed100 wrote: »

I have a 49k mortgage current rate 3.19% for 5 years fixed.
I am allowed to overpay up to 10% a year on it if i want.

Should i overpay mortgage with my savings?

Or do i put the savings in an ISA paying around 2% maximum?

Or open a savings account and pay some into the savings account for 4-6% interest, obviously would be taxed 20% on this though, and only for 1 year probably at these interest rates.

I do need access to the cash as if i am off work for any reason would need extra as only statuary sick pay.

Any advice would be appreciated,
Thanks

You need a decent cash fund to provide a fallback in case of emergencies and unseen events, typically somewhere between three months spending and six months salary is commonly quoted.

Your mortgage rate isn't bad, and you'd struggle to make more than that after tax on most savings products.

Do you have a pension, this could be a useful area to look at?

Uvbntangoed100

I have had pensions through my employers in the past, but no active pension scheme at the moment. I'm 30 years old so its not my 100% priority, but i do know its very important. It will start again at some point soon i hope.

Are there any private pensions you could recommend?

I'm going to open a savings account that pays 6% and look into whether or not my mortgage allows me to access any over payments i make etc. aswell.

Uvbntangoed100

Thanks for the input

sw-blue

Firstly, if you are only 30 and only have a 49k mortgage, then you are doing exceptionally well.

As has been said above, you should always keep a minimum of 3-6 months pay in savings, if you are able to, at the best rate available, probably an instant access ISA. Further, paying off additional mortgage will not only reduce the interest overall, but also the timescale so is always a good option.

As a general rule for someone with savings, never pay off the mortgage if you are getting better returns on savings. Savings take a long time to accrue but are very quick to spend. If your savings and mortgage attract a similar rate, then it's a judgement call depending on circumstances, safety of job etc. If your savings attract a slightly lower rate than your mortgage, only pay additions to the mortgage if your job is safe.

F1F93

My recommendation:

Firstly, open a Nationwide Flexdirect for 5% on £2500. If you have a partner who you trust with money, get them to do the same, and then a joint account for 5% interest on £7500.
A First Direct Regular Savings for 6%, dripfed by a YB/CB or a Santander 123 if you go over.

Definitely fill up the Nationwide and FD as these will give you better rates than your mortgage, so you'll gain more interest than you'll pay.

After that, I'd shove whatevers left in a Lloyds/TSB/etc to get 3% on the rest, unless you want to overpay. With 3% interest it's pretty much equal, it depends what you'd rather: Be debt-free quicker or have more savings?

longtermplanner

11k in savings is good. Has this built up from saving money each month? If so, then I would probably overpay mortgage by 10% this year because your cash savings are going to start to build up again.

If the 11k is a lump sum that isn't increasing, then you need to be a bit more cautious about paying money off the mortgage which you might need. But I would still be tempted to pay a couple of thousand off it.

Uvbntangoed100

Thanks for all of your advice

I think i will go for a mix and balance it out to suite my own needs.

I will switch current accounts and open a regular saver account that will pay 5-6% interest. Top this up monthly.

I will put some money into my mortgage on a monthly basis aswell, as really want to be mortgage free as soon as possible without preventing me from living of course. Even if i move house i will have a great deposit for the future + mortgage free or there about i can save even more cash and live a good life. Concentrate on family, holidays, eating out sometimes and motor vehicles :rotfl: and of course pensions Also would not have to worry so much if no work or no income for a while. Trying to be mortgage free even if only for a short time sounds good to me.

Also will keep 5 or 6k in an Instant access ISA incase of emergencies etc.

This way i think i get the best overall outcome for my future

Cheers

UVB

Live within your means, its not always easy, but it pays dividends in the end!!

xylophone

I have had pensions through my employers in the past, but no active pension scheme at the moment. I'm 30 years old so its not my 100% priority, but i do know its very important. It will start again at some point soon i hope.

Does your current employer not offer a pension scheme?