Overpay Mortgage or keep it for moving?

tbkbt

We've recently had some inheritance come in, we're also earning more than when we took out the mortgage. We currently have 22.5 years left with about £130k left. We may be looking to move to a larger house in the next few years.
Would we be better overpaying the mortgage with the money we have or saving it for an extra-over if we move to a larger house(& larger mortgage).
I wouldn't want to plow our money into this mortgage if it meant we couldn't have the option of moving in a couple of years.

Thanks

fromtheshires

In order for people to provide an educated guess for you, we will need more information:

How much money did you receive?
How likely is it that you will be moving in the short term (5-10). You say a few years, but how likely is this?
How much emergency money do you have?
What is your mortgage rate of interest?
What other debts do you have?

The only way you will plough money into this mortage and it means you couldnt have an option of moving in a couple of years is if house prices tank, however you will have also paid off a huge chunk of money you owe saving you interest. Its horses for courses with what you have provided us as there isnt enough to make an infomred descision at all.

enthusiasticsaver

If you are getting more in savings interest than you are paying in mortgage interest then I would suggest you keep it as savings and continue to save. If your mortgage rate is more than your savings rate then pay it off the mortgage. What is the rationale for keeping it in savings if you don't need it beyond the normal emergency savings?

enthusiasticsaver

fromtheshires wrote: »

The only way you will plough money into this mortage and it means you couldnt have an option of moving in a couple of years is if house prices tank, however you will have also paid off a huge chunk of money you owe saving you interest. Its horses for courses with what you have provided us as there isnt enough to make an infomred descision at all.

If house prices tank and their house value falls then their onward purchase will also cost less ( unless regional differences or in negative equity). If they overpay the mortgage though presumably negative equity would not be an issue.

Thrugelmir

tbkbt wrote: »

I wouldn't want to plow our money into this mortgage if it meant we couldn't have the option of moving in a couple of years.

What's your alternative plan? Many people strive to be debt free. Takes away the biggest financial burden and therefore can be life changing.

tbkbt

In total between savings and the inheritance its £25K, we'll keep 5-10 as a safety net. we can do 1 lump sum without penalty into our mortgage, we can then comfortably overpay at least £100 a month into the mortgage.
The possibility of moving is in 2-3 years time. it depends if we would rather do up this house or move to somewhere bigger, currently its 50/50 chance.
We've no other debts at the moment.
the rational was keeping it in savings is that if we move, we can use the extra £25K as a further deposit, i'll admit i know nothing about how moving from one home to another works with mortgages as we were FTB with this house.
Ultimately we'd like to be mortgage free ASAP as i'd rather save on the interest, but i wouldn't aim for mortgage free if it didn't offer us the flexibility we need.

Thanks for all the advice

DonPatch

If you're undecided as to whether you are going to use the funds to improve your house or move, then I wouldn't pay towards the mortgage.

Assuming you aren't on high variable rate, I would find a good savings account that pays as comparable a rate to your mortgage and then you have it there for when you decide. Then you wouldnt have to borrow your money back from the bank on what may be a higher rate in a couple of years time.

DonPatch

If you're undecided as to whether you are going to use the funds to improve your house or move, then I wouldn't pay towards the mortgage.

Assuming you aren't on high variable rate, I would find a good savings account that pays as comparable a rate to your mortgage and then you have it there for when you decide. You could use for moving costs or improvements. Then you wouldnt have to borrow your money back from the bank on what may be a higher rate in a couple of years time.