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Overpay or continue saving? Advice sought.
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Jevs90
Posts: 4 Newbie
Hello all,
Long-term reader, first time poster. First of all, thank you to this fantastic community for helping me so far. I am always using this website to help get the most out of my money and so far I am considerably better off! OT is worried I'm in love with Mr Lewis!
Thanks aside, I felt it was time to ask about my mortgage. I currently have a two-year fixed rate mortgage (Santander 1.84%) which lasts until May 2017. I am currently paying approx £500 a month. There is still a large sum left to pay.
As well as this, following advice from this wonderful website, I have two regular saving accounts: TSB where I save £250 a month and will get approx 5% gross interest at the end of the 12 months; First Direct where I save £300 a month and will get 6% gross interest at the end of the 12 months. Both of these have been opened in the past month.
My questions is this: Should I use my left-over cash to make overpayments on my 1.84% mortgage (bearing in mind the penalties I will incur if I overpay more than 10% of the total loan for each year) or should I continue topping up these two savings accounts and getting 5% and 6% respectively? I would of course, review both of these at the end of my 12 months.
I know this is very long-winded but as you can see, I knew the right place to go to for an answer!
Alternatively, I'm thinking of finding 10% of my current remaining loan, splitting it across 12 months (to avoid being charged) and using that to overpay and then drip-feeding whatever is left into my savings accounts.
Many thanks in advance,
Jevs:T
Long-term reader, first time poster. First of all, thank you to this fantastic community for helping me so far. I am always using this website to help get the most out of my money and so far I am considerably better off! OT is worried I'm in love with Mr Lewis!
Thanks aside, I felt it was time to ask about my mortgage. I currently have a two-year fixed rate mortgage (Santander 1.84%) which lasts until May 2017. I am currently paying approx £500 a month. There is still a large sum left to pay.
As well as this, following advice from this wonderful website, I have two regular saving accounts: TSB where I save £250 a month and will get approx 5% gross interest at the end of the 12 months; First Direct where I save £300 a month and will get 6% gross interest at the end of the 12 months. Both of these have been opened in the past month.
My questions is this: Should I use my left-over cash to make overpayments on my 1.84% mortgage (bearing in mind the penalties I will incur if I overpay more than 10% of the total loan for each year) or should I continue topping up these two savings accounts and getting 5% and 6% respectively? I would of course, review both of these at the end of my 12 months.
I know this is very long-winded but as you can see, I knew the right place to go to for an answer!
Alternatively, I'm thinking of finding 10% of my current remaining loan, splitting it across 12 months (to avoid being charged) and using that to overpay and then drip-feeding whatever is left into my savings accounts.
Many thanks in advance,
Jevs:T
0
Comments
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I am not a mortgage expert, but I'd recommend using a mortgage calculator - Have you tried using the MSE mortgage over payment calculator?
http://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator
I used this and it made my mind up for me - definitely overpay within my mortgage limits, and save the rest.0 -
Thanks almost! That's a brilliant little tool I didn't know about. I think splitting my money: half into savings;half into overpayments is probably my best bet. Now I just need to decide which regular saver to ditch - TSB or FirstDirect!
Thanks,
Jevs0 -
Good idea to split your 10% by the 12 months & overpay like that.I am a Forum Ambassador and I support the Forum Team on Mortgage Free Wannabe & Local Money Saving Scotland & Disability Money Matters. If you need any help on those boards, do let me know.Please note that Ambassadors are not moderators. Any post you spot in breach of the Forum Rules should be reported via the report button , or by emailing forumteam@moneysavingexpert.com. All views are my own & not the official line of Money Saving Expert.
Lou~ Debt free Wanabe No 55 DF 03/14.**Credit card debt free 30/06/10~** MFW. Finally mortgage free O2/ 2021****
"A large income is the best recipe for happiness I ever heard of" Jane Austen in Mansfield Park.
***Fall down seven times,stand up eight*** ~~Japanese proverb. ***Keep plodding*** Out of debt, out of danger. ***Be the difference.***
One debt remaining. Home improvement loan.0
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