Save or over pay

kavos_wildcat

I have a query related to our Mortgage and particularly making overpayments.


At the beginning of the year I opened a lifetime ISA with the Newcastle building society and currently pay £100 per month into this. The account pays me 25% bonus on deposits per month until I turn 50 years of age, I cant withdraw anything out of this until im 60 or I will lose the 25%.


Ive recently turned 30 so this gives me 20 years of generating the 25% bonus.
My query is, would I be better paying the £100 as an overpayment on my mortgage per month rather than into the savings account. I realise this would pay off my mortgage earlier but would this outweigh the interest I would generate in my isa account which I would equate to £6000 (plus the amount I have paid in)
Our current interest rate on the Nationwide mortgage 1.74% with monthly payments of £419 and is up for renewal early 2020, we have roughly 23 years left on this. Upto now we have always favoured taking years off our mortgage when we meet with our mortgage advisor every couple of years, typically knocking off an additional 3 years every 2 years.


Any advice would be greatly appreciated.

vacheron

kavos_wildcat wrote: »

I have a query related to our Mortgage and particularly making overpayments.


At the beginning of the year I opened a lifetime ISA with the Newcastle building society and currently pay £100 per month into this. The account pays me 25% interest per month until I turn 50 years of age, I cant withdraw anything out of this until im 60 or I will lose the 25%.


Ive recently turned 30 so this gives me 20 years of generating the 25% interest.
My query is, would I be better paying the £100 as an overpayment on my mortgage per month rather than into the savings account. I realise this would pay off my mortgage earlier but would this outweigh the interest I would generate in my isa account which I would equate to £6000 (plus the amount I have paid in)
Our current interest rate on the Nationwide mortgage 1.74% with monthly payments of £419 and is up for renewal early 2020, we have roughly 23 years left on this. Upto now we have always favoured taking years off our mortgage when we meet with our mortgage advisor every couple of years, typically knocking off an additional 3 years every 2 years.


Any advice would be greatly appreciated.

I don't have a lifetime ISA but I doubt yours is paying 25% interest per month, or even per year.

If it is I may have to re-evaluate my investment choices!

kavos_wildcat

I suggest you take a look at Newcastle Building Society. Lifetime ISA for available for anyone under 40, paying 25% monthly bonus from the government. The account interest is marginally more than 1%

sal_III

It's neither monthly nor interest. It's a 25% bonus on top of your savings up to £4000/ year for a total of £1000 bonus per year. There is no 25% being generated until you are 50. it's just a 1 time bonus on each deposit up to £4000 / year.

25% non-compounded + whatever poor interest rate the LISA provider gives you is pretty poor return for 20 year investment, given the fact that you already own a property and can only rely on turning 60 to allow you to access the funds.

kavos_wildcat

Apologies, for not being savvy with my savings, that's why I have come on here, for advise.


Granted the account isn't great for all I know. If anyone can suggest a better route then im all ears. Or even help with my original query.

gaz_moose

do the sums, see what the figures tell you.

you could plonk your money in a saving account and just over pay your mortgage annually, again do the sums see what you think works best.
the game is to get your money working for you.