overpay on mortgage instead of saving?

fenwick458

cloud_dog wrote: »

Weighing up the factual pro or con of the situation is fairly simple. As you mention, your current savings IR is far more than the mortgage IR; so you are financially better off retaining / continuing with your savings (cash) approach. The size of the mortgage in these calculations is not strictly relevant; the relevance is to the cash amount and the IR that receives.

sorry I should have been clearer, the only money I was thinking about moving would be from the santander 123 account, (and the interest on that is ?? , I'm not sure, they say it's 3% but is it not more like 2.5% from reading some of the posts on here?) and I can only repay 10% a year, so it would be like 5k in this year, and then 4.5k in next year which starts in august I think. so the difference in interest rates is not massive between those, but the mortgage amount is 50k, and the money that would be moved from santander is 9.5k, surely the mortgage interest is going to be more than the potential interest gain from savings?
or am I working that out wrong?

cloud_dog wrote: »

Soooo, leave the RS and cash etc until they complete and then if you cannot find a home for the resulting cash with a higher IR than your mortgage you can use it to pay it down.

Remember that when your 2yr deal coms to an end you are likely (don't know all the details) to be able to repay whatever capital (lump sum) you want to.

I still haven't got the HSBC and santander reg savers opened yet as i haven't fully made my mind up and I'm waiting for HSBC to open my advance account, but I think i'm leaning that way anyway. could open them up this month and then they will both complete just in time for when I renew the mortgage and I'll just decide then if I want to pay more off.

ViolaLass

OP, the fact that your mortgage is much bigger than your savings is not relevant here. The saving in interest will only be on the amount you overpay.

fenwick458

atush wrote: »

Why are you only saving in cash? Why not pensions and S&S isas?

are they worth it? S&S isa; I tried this about 10 years ago, got a load of stress, then about a 5% return after 2 years, and wished I had just saved the stress and put it in the bank as they were giving 5% at the time! i suppose I didn't and still don't know enough about where to invest is the answer to that. I'm not a gambler, I like guaranteed returns
and pensions, I don't have one, and I work for myself, so is a private pension worth looking into?

redpete

fenwick458 wrote: »

I can only repay 10% a year (off the mortgage), so it would be like 5k in this year, and then 4.5k in next year

If it's like our coop mortgage you might find it is 10% of the original amount that you can pay off each year, not 10% of the outstanding balance.

jimjames

fenwick458 wrote: »

are they worth it? S&S isa; I tried this about 10 years ago, got a load of stress, then about a 5% return after 2 years, and wished I had just saved the stress and put it in the bank as they were giving 5% at the time! i suppose I didn't and still don't know enough about where to invest is the answer to that. I'm not a gambler, I like guaranteed returns
and pensions, I don't have one, and I work for myself, so is a private pension worth looking into?

2 years isn't nearly enough to be able to judge returns but yes they aren't guaranteed so if you are someone that wants a guaranteed amount they aren't for you.

For me they are definitely worth it though, I put all spare cash into S&S ISAs rather than paying off mortgage.

greenglide

I work for myself, so is a private pension worth looking into?

Is the "work for myself" self employed or a limited company?

If limited company there are distinct advantages in the company paying employers pension contributions as saves corporation tax.

If self employed the are less tax advantages but the question is "how will you fund your retirement"?

LHW99

Our mortgage is co-op too, but was Britannia - for that its 10% of the O/S balance at the previous year end.

atush

Dird wrote: »

You now have to opt out of your pension scheme every year. Even my mom couldn't be bothered to do it

No, you dont. There are still a number of employers who havent had to start schemes yet.

Plus all the SE.

System

I would recommend s&s isa funds, good growth, some risk, good liquidity

atush

fenwick458 wrote: »

are they worth it? S&S isa; I tried this about 10 years ago, got a load of stress, then about a 5% return after 2 years, and wished I had just saved the stress and put it in the bank as they were giving 5% at the time! i suppose I didn't and still don't know enough about where to invest is the answer to that. I'm not a gambler, I like guaranteed returns
and pensions, I don't have one, and I work for myself, so is a private pension worth looking into?

First of all, you can invest in some lifestyle funds or global trackers whihc dont need a lot of knowledge, read the Vanguard thread.

Second, you should expect over time (ie many years/ even decades) for equities to return more than inflation b around 4% so should be beter than cash over long periods.

Third, yes pensions can be a good thing. AS you put in 80 and the govt adds 20. So you get 100 in your pension that only costs you 80. again use lifestyle funds or global trackers.