To overpay or not?

Lindy_Lair

Hi I hope I am posting this in the right section. I have been a lurker for a while & love reading about people paying back their mortgages early and would love to do the same. My question is for me is it actually worth it? I only have £63,118 outstanding on my mortgage & pay £330 per month on it with 18 years left. I've put these figures into the early mortgage repayment calculator & it appears that the interest rate is only 1.4%. I have recently got married & have about £4000 owing on credit cards, some of which is on interest free, some of which is on a low APR of I think about 7%.
Whilst I know that it would probably make more sense to pay the credit cards back first, it is addictive paying extra payments on the mortgage. I guess my question is, if I didn't have the credit card, would it still make sense to over pay the mortgage? My thinking is that whilst the rate is so low, I would actually be making big indents to the outstanding balance and I would be able to reduce it before interest rates start rising again. Or is there really no point when the rate is so low? Sorry I am a bit new to all of this!

edinburgher

Do you pay basic rate tax? If so, you can get a range of current accounts offering 3-5% that would spank the rate on your mortgage. It makes more sense to save into some of these, otherwise you are throwing away money.

If by '£4k owing' on credit cards, you mean 'I owe £4k and haven't saved any of it yet', prioritise paying off that very expensive 7% credit card (it's not low APR, it costs you 5x as much as your mortgage rate!)

Once the 7% card is paid off, keep the money for the rest of the CC debt in the best savings account you can find until the 0% period runs out, then pay it off immediately.

If your rate is 1.4%, there would seem to be very little point in OPing at this point, feelings of security aside.

You need to replace addictive OPing with addictive paying back your debts

If I came round to your house and offered to take 5%+ of your salary off you, would you be a) happy or b) !!!!ed off? That's the choice you're making for yourself by ignoring the CC debt.

Hope this is taken as constructive feedback :beer:

Lindy_Lair

Ha ha yes it has definitely been taking as constructive feedback Edinburger!
It's just hard to see the wood from the trees sometimes!
You are right, we do need to pay back the credit cards asap, other wise we may be in danger of not paying it back before the interest free period expires. And Yes I do pay basic rate income tax. Thank you

letsdothisnow

credit card first then attack the mortgage