Keep savings or overpay mortgage

user15

Hello


I have 125k savings (earning 3%) and a 185k mortgage @ 3% 25 years to go


Would you keep the savings or overpay mortgage?


No plan to access the savings for 10 years.

atush

I'd be changing that expensive mtg, mine is 1%.

Lokolo

Yes you should be able to get a much lower rate on the mortgage. If you are close to an LTV then it maybe worthwhile using some of the savings to get to the lower LTV and lower the rate even further.

chockydavid1983

Get a lower mortgage rate (using savings to lower LTV if appl)
If no need for cash for at least 10 years, consider investing the rest.

jimjames

chockydavid1983 wrote: »

Get a lower mortgage rate (using savings to lower LTV if appl)
If no need for cash for at least 10 years, consider investing the rest.

I agree. I certainly wouldn't be keeping all of £125k in cash for 10 years if it wasn't needed

user15

Mortgage is currently on a fixed rate for 7 years which was taken out in Feb 2016, so cannot change that.
LTV is approx. 50%

chockydavid1983

In that case, you're probably best off investing or adding to pension.
Leaving a decent emergency fund of course.

economic

Consider also overpaying the mortgage if you can?

LHW99

Even on a fixed rate you can usually overpay by a certain amount - ours was 10% of the amount outstanding at the end of one year could be overpaid in the next.
Check the Ts & Cs

Thrugelmir

user15 wrote: »

I have 125k savings (earning 3%) and a 185k mortgage @ 3% 25 years to go

Interest on the mortgage is calculated daily and charged monthly. As a consequence the true APR will be higher than 3%. Personally I'd overpay the mortgage to some degree.

AnotherJoe

user15 wrote: »

Mortgage is currently on a fixed rate for 7 years which was taken out in Feb 2016, so cannot change that.

Yes you can, its just that it will cost you. Whether thats worthwhile doing is a simple sum.

How are you getting 3% on £125k?