Mortgage pay off vs savings

PawelK

Hello community.

I know the basic rule about this so if savings rate is better than mortgage is better to save. However, here is my current situation.

Mortgage fixed for five years at 2.14%
£12k savings.

I actually have two tesco accounts where £3k in each is saved as they are easy access and also higher rate than my mortgage.
I have another £6k sitting around.
My flex regular saver with Nationwide has just been opened but that is just £250 a month which I can pay to from my monthly salary.
So, I am prepared to pay £5k towards my mortgage length as I dont know any other easy access accounts where i can keep this amount earning more than my mortgage interest. Does anyone know of any or any reason why I shouldnt be paying this towards my mortgage?

Many thanks and have a great weekend all. Beautiful sunshine in London (finally) :j :T

getmore4less

If the option is to pay of the mortgage then you can look at term accounts you don't need the easy access.

NS&I 2.2% 3y.
https://www.nsandi.com/guaranteed-growth-bonds

PawelK

getmore4less wrote: »

If the option is to pay of the mortgage then you can look at term accounts you don't need the easy access.

NS&I 2.2% 3y.
https://www.nsandi.com/guaranteed-growth-bonds

Thanks. While it is higher, the difference is tiny and as it would be fixed for three years we may as well see saving rates go slightly up this year or next. That would be an argument to hold onto cash for now.

Thrugelmir

When does your 5 year fixed rate product expire?

PawelK

Thrugelmir wrote: »

When does your 5 year fixed rate product expire?

Mortgage started in October 2017.

dimbo61

It is always a good idea to have 6/12 months of income in easy access savings just in case you need to replace the car or boiler etc.
6 months if working for an employer with a steady job and 12 month ( of income ) if self employed.
Once you have got this you could either overpay the mortgage each month or check out pension savings. LISA !!!!

enthusiasticsaver

I would pay it off the mortgage. You can get better returns by investing but that is more volatile and no guarantees. There is every indication interest rates will rise and it might put you in the next LTV bracket for next time. There is probably an OP limit though so make sure you don't incur penalties

PawelK

dimbo61 wrote: »

It is always a good idea to have 6/12 months of income in easy access savings just in case you need to replace the car or boiler etc.
6 months if working for an employer with a steady job and 12 month ( of income ) if self employed.
Once you have got this you could either overpay the mortgage each month or check out pension savings. LISA !!!!

Yes, I already have £6k of easy access savings which I believe is more than enough for any emergency I might face. i am single, no car and living in London. I have considered LISA but I remember there was some con vs work place pension (which I already have) that made me think it is not such a good idea. But I am 37 so still 2.5 years left if I want to open one. Thanks!

PawelK

enthusiasticsaver wrote: »

I would pay it off the mortgage. You can get better returns by investing but that is more volatile and no guarantees. There is every indication interest rates will rise and it might put you in the next LTV bracket for next time. There is probably an OP limit though so make sure you don't incur penalties

Yes, that is the odea, thank you. I am risk averse person so prefer stability over high returns or high losses. In just under 5 years when I will be remortgaging, interest rates will most likely be much higher than now so having lower ltv should help especially that I intend to also make monthly overpayments. My mortgage is right now around £189k and i can overpay free of charge 10% annually which is the limit I am very unlikely to reach.