Advice on upsize

hellojohn8doe7

I am not sure if I am posting in the correct place, please excuse.

I own my house with 60% LTV with interest 1.94% fixed till mid-2021. My overall mortgage term finishes in Mar 2036. My savings is 6.5 months worth of expenses as cash in a bank account paying [STRIKE]0.2%[/STRIKE] 0.55% interest rate.

We want to up-size in 2 to 2.5 years from now. What will be a good financial strategy: Should I keep growing my savings in higher interest rate accounts or overpay mortgage and increase my equity?

Lokolo

Ignoring any early repayment charges, whatever has the highest rate is what you pay first.

Be that a 19% credit card, 2% mortgage or 1% savings interest. The highest x% is what you go for.

hellojohn8doe7

Other details of my financial life is at: forums.moneysavingexpert.com/showthread.php?t=6046688

sal_III

0.55% interest rate is abysmal, even for an ISA, you shouldn't be going for anything under 1%. Depending on your tax band and interests allowance you should be going for 2%+ 1-2y fix savings accounts until you reach your allowance.

Although your mortgage rate is quite high, so you should be better off overpaying the mortgage with any extra cash over your "rainy day" funds.

hellojohn8doe7

Thanks on the interest rate advice.

Going back to the original question - should I have my money as cash or equity in the house? for the purpose of upsizing in 2 to 2.5 years?

SunnyCat

hellojohn8doe7 wrote: »

Thanks on the interest rate advice.

Going back to the original question - should I have my money as cash or equity in the house? for the purpose of upsizing in 2 to 2.5 years?

If you can get a savings account with a rate that's higher than your mortgage, you should save cash. If your savings rate is lower than mortgage rate you should overpay.
Here are your top choices for savings;
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

Lokolo

hellojohn8doe7 wrote: »

Thanks on the interest rate advice.

Going back to the original question - should I have my money as cash or equity in the house? for the purpose of upsizing in 2 to 2.5 years?

Did you not understand about the interest rate advice?

If savings pays you more, then put it in savings.
If mortgage costs you more, then put it into the house (by overpaying). You can't have "cash in the house", that's cash savings!