Mortgage overpayment or savings?

meggles

i need some input on this.

i have an interest only mortgage for £137,000. my monthly repayments are £690. variable tracker interest rate of +0.28% (currently 6.03%) I can afford to overpay by about £110 - £200/month. (max... £2500 yearly)

i have already used up my ISA allowance for the year.

i have a halifax high interest saver which has an interest rate of 6.17%. i am a high rate taxpayer (just barely)

looking at the sums, i think it's best for me to put this extra money in the high interest saver and pay off annually. but i need confirmation on this.

thanks in advance!

meggles

bump. bump.

Jonbvn

With you being a high rate tax-payer, I do not think there is any savings account that will offer a net interest rate higher than your mortgage rate.

Therefore, I would suggest you pay-off your mortgage.

meggles

i'd be paying £690 in interest. and then i'd be overpaying by £100 - £250/month. the question was whether it's best to overpay monthly, or put this money aside monthly and then overpay in one lump sum.

if i was a lower rate (22%) tax payer, would the answer be the same?

thanks for the answers.