Save vs Overpay

TwentySomethingGirl

Hello

We are looking to move house this year. We are saving some money each month but it's going into our main (interest baring at 1.5%) bills account, savings balance at about £9k. We each have a TSB account at 3% which have the full £1500 in which will stay there for now.

My question is, is it worth overpaying our savings each month onto the mortgage (at 1.64%), as the net effect of savings up/mortgage down will be the same when we do move, but would be 0.14% better off on the interest rate? I will keep most of what we have now in cash and overpay the savings going forward. It won't be enough to trigger any ERCs.

Thanks in advance

cooltt

TwentySomethingGirl wrote: »

Hello

We are looking to move house this year. We are saving some money each month but it's going into our main (interest baring at 1.5%) bills account, savings balance at about £9k. We each have a TSB account at 3% which have the full £1500 in which will stay there for now.

My question is, is it worth overpaying our savings each month onto the mortgage (at 1.64%), as the net effect of savings up/mortgage down will be the same when we do move, but would be 0.14% better off on the interest rate? I will keep most of what we have now in cash and overpay the savings going forward. It won't be enough to trigger any ERCs.

Thanks in advance

Always, always,always ALWAYS more benefit to overpaying a mortgage no matter what your savings rates are. Interest is calculated daily on a mortgage and monthly on savings, funny that, it's almost like the banks are looking after themselves not the customer.....

dimbo61

You appear to have a good savings pot for emergencies !
Overpaying is a good idea as you build up an overpayment balance on your account and Save interest long term.
Paying

SuperHan

cooltt wrote: »

Interest is calculated daily on a mortgage and monthly on savings, funny that, it's almost like the banks are looking after themselves not the customer.....

No it's not ? It would be too easy to manipulate your bank interest if it was calculated monthly.


All of mine (both mortgage and bank accounts) calculate daily and compound monthly.

muhandis

cooltt wrote: »

Always, always,always ALWAYS more benefit to overpaying a mortgage no matter what your savings rates are. Interest is calculated daily on a mortgage and monthly on savings, funny that, it's almost like the banks are looking after themselves not the customer.....

This is incorrect. Most (if not all) high street savings/current accounts calculate interest on a daily basis, the same as most lenders do for mortgage accounts.

https://www.barclays.co.uk/help/savings-and-investments/interest-rates/interest-calculated/
https://www.nationwide.co.uk/products/savings/future-saver/features-and-benefits

getmore4less

cooltt wrote: »

Always, always,always ALWAYS more benefit to overpaying a mortgage no matter what your savings rates are. Interest is calculated daily on a mortgage and monthly on savings, funny that, it's almost like the banks are looking after themselves not the customer.....

Its down to the rates, daily, monthly, yearly makes no significant difference.

SouthLondonUser

OP, assuming you don't pay taxes on your interest income, how much money are you talking about? A difference of 0.14% isn't much. £3k at 0.14% for 12 months means £4.20 ! Consider that against how important it is to have a few more thousand pounds available in a rainy day fund for an emergency.