New MFW/ Calculations, homework checking and q's

OnlyGuyWhoLikesTwix

OK sorry guys I have new questions (inspired by another thread).

I'm working with the spreadsheet above. Now, my mortgage fixed rate interest rate is 2.39%.

I have £5000 sitting in my savings right now (not including my emergency fund) and have decided that £500 per month is a comfortable minimum overpayment per month, as in that's the lowest I can easily do though some months may be more.

Now, if I overpay absolutely nothing, my year 5 balance is £119,875. Using my £5k lump sum and then £500 overpaid per month, my year 5 figure turns into £82,758.

That's fine I understand all that and from cross-checking with a few other calculators, that does seem to be the case.

However, I have been googling for high-interest ISAs. London Capital and Financial have such an ISA which is £5,000 minimum opening (that's fine!) and is three years at 8%. I understand that means I can't draw out for a minimum of 3 years, but I'm looking at 5 years when my fixed rate ends. Now I've used a couple of ISA interest rate calculators online and at the end of five years, the total value would be £44,053.

Now £119,875 - £82,758.= £37,117. So looking at this, I could essentially make an additional £6936 by going the ISA route as opposed to overpayments.

So again and please bear in mind this is new territory, is there anything wrong with my thinking? Anything I should be aware of or risks I haven't considered?

EDIT: I've done a little more research and the LCF ISA that I found there is a very high risk investment which I am not going to do. However, still researching this idea and wondering if any other MFW are doing that?

getmore4less

It is quite simple IF you can find savings at a higher rate(net) than the mortgage rate then save.

now there is the twist, people fix for a longer time often because they think rates will go up so that points to saving even if the current rates are not quite there they should be soon.

there are safe rates at around 2% ,
The current accounts and regular savers can squeeze a bit more.

There is also stoozing not as easy but if you can find no fee balance transfers or purchase cards at 0% interest yo ucan juggle cashflow to overpay early.

Quite a few MSErs are into P2P lending ans seem happy with the risk/return spreading their money and getting much better than 2.39%

OnlyGuyWhoLikesTwix

That's definitely the trick. Currently I have found nothing that offers above 2.39% net that would allow me to save at the rate that I would like. I could possibly work a combination of both overpayment, but for the few 5% AER ISAs I've found via First Direct et al, earning £98 over the year seems to almost not be worth the effort.

However that entirely depends if the interest rate goes up or not... which is crystal ball time

I've not heard of P2P but then I've never looked at investments before. I think I need to do some homework before I make any decisions as to what to do.