overpay mortgage or save?

Kjane28

Hi


Can anyone advise me on how best to save money over the next 18months to 2 years. We have recently got ourselves into a position where we can save about £1000 a month. We have quite a big mortgage and are planning to borrow more in a couple of years to extend our house. We have no penalties for making overpayments on our mortgage which has an interest rate of 1.75%
We have not used our full ISA allowance. Would it be better to overpay our mortgage with the £1000 a month, knowing that we will need to borrow it back again after a couple of years (will this save us on the interest - we hope not to have to extend our repayment term even with the new borrowing) OR is it better just to put our savings into an ISA and leave the mortgage alone? Bit confused - can anyone help??


Thanks!

Foxy-Stoat_3

Put your £1k a month in ISA's or Premium Bonds, that way you won't need to ask for your money back.

getmore4less

what are the full terms of the current mortgage.

Tracker fixed is so for how long what's the followon rate etc.

estimated build cost(eg can you save enough in time)

having cash is much easier than trying to borrow more.

The mortgage rate is low so any saving over the net savings rate will be small.

Use some monthly savers, high interest current accounts(multiples) and you could beat the mortgage rate.

Kjane28

thank you - o thought it would be a bit mad to put the money onto the mortgage only to borrow it again. I think we will save in ISAs and just borrow the remainder of what we need.
thanks again for the advice

getmore4less

Kjane28 wrote: »

thank you - o thought it would be a bit mad to put the money onto the mortgage only to borrow it again. I think we will save in ISAs and just borrow the remainder of what we need.
thanks again for the advice

you have to be carefull so plan ahead,

Whats your LTV.

What does your current lender offer for extra borrowing, might a full new mortgage be better, any tie in with current deal or extra borrowing(so they get out of sync), LTV issues, income issues can all change the ability to get more money.

Cost small amounts and fees can make it very expensive.