Overpayments vs Savings pot for HTB EL

aa92

Hello,

Would appreciate the advice/thoughts of fellow forum members on the following:

Currently have a HTB EL mortgage (London so EL is 40% ~240k). Mortgage is 1.9% five year fixed, monthly repayments ~1k. 10% capital reduction per annum can be made without any charges for overpayments. Interest on HTB EL will kick in 5 years from now.

Able to save around 2k every month after all monthly expenses.

I'm not sure whether it would be better to overpay on the mortgage (current balance is 309k) or to find best return on the monthly saving we can make elsewhere?

There is no current plan to sell the house at any point.

Many thanks.

mn92

aa92 wrote: »

Hello,

Would appreciate the advice/thoughts of fellow forum members on the following:

Currently have a HTB EL mortgage (London so EL is 40% ~240k). Mortgage is 1.9% five year fixed, monthly repayments ~1k. 10% capital reduction per annum can be made without any charges for overpayments. Interest on HTB EL will kick in 5 years from now.

Able to save around 2k every month after all monthly expenses.

I'm not sure whether it would be better to overpay on the mortgage (current balance is 309k) or to find best return on the monthly saving we can make elsewhere?

There is no current plan to sell the house at any point.

Many thanks.

I would also like to see other's views on this question. I am looking to buy in London next year using the HTB Equity loan and I want to have a plan wether to overpay or not.

My initial thoughts are to try and maximise savings for those 5 years that you have a fixed rate and then look to remortgage at year 5 by having a ''bank mortgage'' only if income and circumstances allow and by using the savings or part of what you will save in 5 years.