Save all, a bit or do overpayments

psamatt

Hi,

I'm new to this forum so please bear with me.. :-)

I am currently in the situation where i've got 5 * my monthly income in savings. I top up these savings every month and am thinking should rather than saving this money put it on my mortgage as an overpayment?

I am at 70% LTV on my mortgage so am looking to shift some off it, with my savings rate being a lot less than my mortgage interest rate, should i rather than continue to save this money, put it down as an overpayment? Maybe still save 20% and put the other 80% as an overpayment?

Thanks :beer:

marathonic

If your mortgage rate is higher than your savings rate, and you already have an emergency fund in place, pay the extra off your mortgage.

Try to get down to 60% LTV ASAP, switch to a better mortgage rate and then re-assess the situation.

LateStarter

The most common advice is to save 6 months worth of expenses (including mortgage payments) for the worst case scenario (sickness, unemployment etc).

After that, chuck it all on overpayments.

Yorkie1

Don't forget to look at your finances in the round, not just at emergency savings and the mortgage. Do you have a pension, for example?

Thrugelmir

Any plans for any major items of expenditure? No point in overpaying the mortgage if end up borrowing money to pay for something.

psamatt

Yorkie1 wrote: »

Don't forget to look at your finances in the round, not just at emergency savings and the mortgage. Do you have a pension, for example?

Yeah i contribute to my work pension 3%, which in turn they contribute towards 5%, and have been since i started work 4 years ago, im 27 now

psamatt

Thrugelmir wrote: »

Any plans for any major items of expenditure? No point in overpaying the mortgage if end up borrowing money to pay for something.

What would you say about a car on a short term loan (3 years), rather pay this off then the mortgage? obviously if the interest rate is higher i'd imagine so.

Savingdad

I keep a 9 month emergency fund with the thinking if I am out of work we can make savings from week 1 and we can streaçh it out to a year.
Anything after that goes as overpayments on the morgahe but I don't have any loans and psy off credit card balances in full each month , no point overpsying a 4% debt of your paying 29% on a creadi card.