Mortgage overpayment v savings

GRStaffs

Hi,

I have a mortgage with Nationwide and have been making overpayments for a few years. I now want to move house and Nationwide have advised me that I can withdraw the overpayments I have made if I choose.
The question I have is with the lending criteria being as strict as it is would I be better withdrawing the overpayments made and have them showing as savings or leave the ovepayments on current mortgage so I have more equity in my property?
The outcome will be the same, the amount will go as a deposit towards new property, just not sure if it will go in my favour more as savings rather than equity.
Any help/advice/experience would be gratefully received

Yorkie1

What's the interest rate on the mortgage?

Charlton_King

I think the general consideration is: are you being charged more as interest on your mortgage than you would be getting as interest on your savings..?

If so, that's where you put your money.

Dave_the_Ginger_Cat

You only need to take money out if:
1) You have sunk all your spare cash into overpaying, and need some for the up front fees
2) You want to keep a little for white goods/carpets etc
3) You want to keep an extra cushion in the bank post-completion for unexpected bills

I presume you've already done the maths to check you're saving more than the interest you're paying.
Since you say the it won't affect the borrowing, I'd leave it be

flimsier

I can't imagine it would be better to withdraw.

kingstreet

If you still have the option to re-draw overpayments, I presume you are on BMR, 2.5%.

By re-drawing the overpayments, you can increase the amount on BMR you can port to your new mortgage, as it's the balance on the day the mortgage is redeemed which is portable.

The end result is you get more of your mortgage on BMR and less on whatever new rate you're being offered, if higher.

kingstreet

GRStaffs wrote: »

The question I have is with the lending criteria being as strict as it is would I be better withdrawing the overpayments made and have them showing as savings or leave the ovepayments on current mortgage so I have more equity in my property?

It makes no difference. The amount you wish to borrow and loan to value will be the same either way.

The difference will be in what you port and the rates which you may be able to consider.