Keep savings or overpay mortgage

user15

91k in fixed isa @ 2% ends July 2017
33750 spread across current accounts and regular savers 3-5%

YorkshireBoy

So back to your original question, do you even have a choice as to whether to overpay or not? I would have thought early access to the FRISA savings was not possible, or heavily penalised financially? Have you checked?

You shouldn't withdraw the current account/regular savings funds to overpay whilst ever they're paying >3% AER, so your question really relates to what you should do next July, nearly a year from now? In which case, sit tight and start looking next Spring?

user15

Thanks to those of you that have responded.
Yes i would lose 120 days worth of interest if I withdraw the money from the ISA.

Yes I will wait to see what happens in the next few months, as I have seen the current account rates are under review on some of the main players.

So best to sit tight and wait......

AnotherJoe

user15 wrote: »

91k in fixed isa @ 2% ends July 2017
33750 spread across current accounts and regular savers 3-5%

So you are getting more like 2.5% with one year to go on the 2% at £91k?

Low risk option, I'd remortgage now using the £91k and take no more than a two or three fixed period. You'll need to do the maths but it seems certain you'd still come out better even after eating the ERC. . Presumably you believed all the financial commentators saying rates could only go up ?

Higher risk option, remortage now using some of the £91k and put say £50k of it in something like VLS60 and leave it for ten years.

jamesd

What I'd be doing with that £125k is using P2P to make a taxable £12.5k+ a year. Also diverting some of it to a VCT each tax year to mostly eliminate my income tax bill, since VCT buying generates a 30% of purchase price tax refund from HMRC, capped at tax payable in the year of purchase.

Not really would be since it's what I'm doing in my own case where I have savings well above the mortgage balance.