Shared Ownership - Should I overpay now or save for later?

sharedownership_2

Hi everyone - I'm new to the world of mortgages so could do with some advice!

I have just started a shared ownership mortgage, the details are:

I own 30% of the property
Santander 2 year fixed rate of 2.29%
I put down a 20% deposit on my 30% share

Ideally I would have bought a larger share from the outset, but my partner's job is fixed term so the lenders wouldn't include them, so I had to put down a large deposit on a smaller share.

After the 2 year fixed period, we will be looking to remortgage and buy a larger share - my partner will also hopefully have a permanent job then so can go on the mortgage.

Every month my mortgage payment is £225, which is made up of £124 interest and £101 debt repayment.

Say I have £100 per month extra (after other savings), so I need to decide whether to overpay that on my mortgage each month. Or do I save it over the 2 years and have a £2,400 lump sum at the end in order to buy a larger share of my property? I do not have any other debts to pay off.

I think the answer is - If I can get a savings rate higher than 2.29% I should save it, and if not then I should overpay in order to build up my equity stake in the property, which can be used after the 2 years to buy the larger share.

Is it as simple as that? Does overpaying on a mortgage make future lenders look more favourably on me?

Many thanks!

csgohan4

Overpaying increases the equity in your house, it has no reflection on future lenders.

If you find a savings account with 2.29% let me know too