My fixed Mortgage vs Savings vs New House Mortgage deposit?

Hi All

I'm after some advise please on what i should do with my savings as currently have an ISA that was paying 1.5% which is going down to 1% so i moved all the money out of the ISA into a newly setup Santander 123 account to get the 3% interest only to find out a few days after opening it was going to be slashed to 1.5% :mad:

So now my saving rates are going to be lower than my mortgage rate 2.69% so should i use the money in savings to make an over payment on my mortgage? :cool:

Normally the answer would be YES, but as i am looking to buy a new house with my partner sometime next year (I am the only name on my current mortgage) I was wondering would i be better leaving the money earning little interest in the bank to have as a deposit when we both apply for a new joint mortgage on a new house or pay off a big chunk off my current mortgage and use the equity in my current house once sold as the deposit for the next house?
Worked out as mortgage free 4 years and 4 months earlier by making a one off over payment so saving on interest i would have paid.

My mortgage is fixed till 2018 @ 2.69% but only get charged a penalties if i wanted to pay it all off, it is also portable but not sure if that even works if I'm buying a house with my partner (Would need to be a new joint mortgage right?) .

Hope this all makes sense...;)
Any advise would be great and thanks for your time. :money:

Replies

  • edited 31 August 2016 at 10:19AM
    AnotherJoeAnotherJoe Forumite
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    edited 31 August 2016 at 10:19AM
    Yes, as rate is lower than mortgage, pay off mortgage and that money will be the equity in your next house .

    Dont forget you'll need an initial deposit at exchange though, so make sure there's enough cash for that. It wont be the whole 10% (or whatever you agree, I've agreed 5% the last two times) because usually that initial deposit money gets passed up the chain AFAICR. But leave a prudent amount just in case.

    Yes it will need to be a wholly new mortgage.
  • swindiffswindiff Forumite
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    How much money are you talking about. There are a few accounts paying 3, 4 and 5%
  • swindiff wrote: »
    How much money are you talking about. There are a few accounts paying 3, 4 and 5%

    15k, the only accounts that were paying more only have a limit of 2.5k?
  • swindiffswindiff Forumite
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    If you are a couple you can have 3 accounts between you.

    So £6k in TSB at 5%
    £7.5k in Nationwide at 5% (for 1 year, then reverts to 1%)
    £15k in Club Lloyds at 4%
    £9k in Tesco at 3%

    If you are single you can hold 3 Bank of Scotland Accounts at £5k each. So £15k at 3%
  • swindiffswindiff Forumite
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    You can also feed a savings account such as nationwide with £500/month at 5%. So drip feed it from one of the 3% paying accounts
  • swindiffswindiff Forumite
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    There is a useful calculator here

    https://www.bankaccountsavings.co.uk/calculator

    You could net 4.4% on £15k as a couple, just using current accounts. Could do slightly better if also drip feeding into savings accounts.
  • edited 31 August 2016 at 2:19PM
    FrugalMavFrugalMav Forumite
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    edited 31 August 2016 at 2:19PM
    Thanks for the advise, yes i have looked at this and although we have been together for a few years we are not ready to have any joint accounts as not lived together long so wont have a joint until we get a house together. She also has done what you have suggested with her money by setting up multiple current accounts and drip feeding them.
  • Also as advised by moneysavingexpert to wait till November when the 123 account gets cut to 1.5% to see what all the other banks do as sure they will also follow.
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