Overpay or save? How do you decide?!

ifihadalittlemoney

Hi All, :j

Well done everyone for embarking on your MFW journey :T. I was wondering how you all made the decision to either a) save for offset / mortgage neutrality or b) overpay.

I have dabbled with OP's previously but found that sometimes I think I should really save because what if I want to move or need this or that?! Probably due to being in debt for a while, (now debt free). As a result, some months I save, some months I OP. I find I am stuck, I don't seem to do either regularly, although I try! I now have approximately 4 months worth of outgoings in my savings and within a year have only knocked £1.5k from my mortgage total :mad: .

I'd love to hear how you made your decision!

Thanks :beer:

edinburgher

Whatever pays the best.

I've made no OPs this year, as I'm beating my mortgage rate in both cash savings and investments.

Thrugelmir

ifihadalittlemoney wrote: »

I now have approximately 4 months worth of outgoings in my savings and within a year have only knocked £1.5k from my mortgage total :mad: .

No one said that paying down a mortgage quickly was easy.

As the years pass the benefits will mount just like rolling a snowball.

Albert Einstein - “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

ifihadalittlemoney

Thanks Edinburgher and Thrugelmir I'll keep those in mind.

F1F93

Although I don't have a mortgage yet, my OH and I have both agreed to never overpay the mortgage.

Simply because, let's assume we have a £100,000 mortgage and £30,000 in cash.
If something happens (we lose our jobs, etc) what will be more important to us? A mortgage of £70,000 or £30,000 cash? Sure, the £70,000 mortgage will be easier to pay, but if you have no income and no savings then you're still no better off.

It's the same idea as the advice that you should have 6 months to a year of savings, but I'd rather take that to the next level.

It also means that if something major happens we aren't worried about dipping in to our allotted "6 months outgoings" of savings, because we have much more than that.

Also, given that with the good interest rates around nowadays, you might not beat your mortgage but you'll be close enough that I'd rather have the security of savings.

edinburgher

Do remember that having large amounts in savings will affect your eligibility to certain benefits/elements of certain benefits (JSA is one of those if I remember correctly?)

Then again, we've always assumed that benefits weren't really there for 'us' as we've been lucky in having jobs with fair salaries and try to keep some savings.

F1F93

edinburgher wrote: »

Do remember that having large amounts in savings will affect your eligibility to certain benefits/elements of certain benefits (JSA is one of those if I remember correctly?)

Then again, we've always assumed that benefits weren't really there for 'us' as we've been lucky in having jobs with fair salaries and try to keep some savings.

Exactly, same with us. And if we had large amounts of savings, we would have no need for JSA anyway!

ifihadalittlemoney

F1F93 you're right about the security!

aggypanthus

edinburgher wrote: »

Whatever pays the best.

I've made no OPs this year, as I'm beating my mortgage rate in both cash savings and investments.

Interesting, whats rates are you getting?

edinburgher

aggypanthus wrote: »

Interesting, whats rates are you getting?

5% or thereabouts from N@tionwide and T5B. 4% or thereabouts from Clyd3sdale Bank. Wouldn't be able to get more than about £18k saved this way, we have £12-13k in cash. Tax to come off all of those rates, but still better than our 3.15% mortgage rate.

Investments are different obviously, but we've seen a decent enough uplift this year.

Beckyy

Everybody is different.


The security of having an emergency fund is one which we should all have if possible.


If you have a good amount to fall back on, and your mortgage rate is higher than your savings I would OP. Unless you are saving for something in particular, in which case I would find a distribution you are happy with. We're currently aiming to save twice as much as we intend to OP this year, so we just divide disposable income as necessary.