Re mortgaged should i over pay?

kopite323

Hi all

I have just taken out a new mortgage deal. fixed for 5 years.
After speaking to an independant financial Advisor i asked him if i should overpay my mortgage by £100 a month. He said i should stick the £100 a month in an ISA as it would earn me more cash.
But having read some of the posts and articles on this site i am a little unsure.
I have read the terms and conditions of the mortgage deal and can pay upto 10k in overpayments in any year period.
I have an isa already so have a buffer zone if anything was to happen.

Question is, What would you guys do?

Kaz2904

If your ISA for the year is full you should overpay.
After that according to Martin you should still fill your ISA first. If you are then able to earn a higher interest rate than your mortgage costs (after tax), theoretically you should pay into savings.
Most people overpay for the psychological factor of seeing their mortgage decreasing over time.

Basically depends on your mortgage rate and ISA rate.

keeperbear

I agree with Kaz2904. However, sometimes I still preferred to overpay my mortgage just to see the mortgage balance going down on my flat.

Welshlassie

It would also depend how often your interest is calculated, if it is daily or monthly you may want to consider overpaying each month, if it is annually then you are better off saving it into an account and paying it off annually just before your payment is recalculated.

Also do you have to pay a minimum amount each time you overpay as some mortgages will charge if you overpayment is less than say £500.

Otherwise I agree with Kaz2904