Overpaying for 1 year then move? Or save for move?

Noctu

Hi all
Sorry if this has been asked before, I'm a newbie to overpayments!

I have just qualified and will be on a much better income when I get a job in my field (which should be in the next few months). Our household income (I have a DH, no kids) will be increased substantially.

Here's the conundrum... we want to move in a year's time to a much nicer place, being as we will be able to afford it & it's something we've wanted for many years.

Should we overpay on our current mortgage for the next year, or put the money in a savings account for the move? Or a bit of both?

We are on Nationwide's SVR (2.5% & unlimited overpayments), our mortgage is £362/month (capital & interest) and we could overpay by £1k a month with not too much trouble.

What would be the most beneficial considering we're going to move house? We couldn't overpay very much at all once we move as we're looking at mortgages which would be around £1100/month payment.

Would really appreciate any advice.

TBagpuss

Do you have any other savings? When you move, you will need money for surveys, searches etc, so it would make sense to have some easily available savings for those things (and possibly for any cosmetic work you do on your house to make it more attractive when you come to sell.)

Do you have any other debts? If so, and if the interest rates are higher than 2.5% then it is likely to make sense to use the extra to reduce those debts, first.

What rate could you get if you put the money into savings? If you think you can get more than 2.5% after tax AND if you have the discipline to save it and not spend, then putting it into savings makes sense.

Check the terms of your mortgage. Can you drawn down any overpayments if you want to? (I have a Nationwide mortgage, and can borrow back any overpayments on the original borrowing - which gives you ore flexibility)