Saving to overypay lump sum off mortgage

jamels2

For the last 6 months or so I've let my current account grow with the aim of having 13k by January to overpay my mortgage ( which is 10% per year).
Then after paying that off I want to save for the next 10% (approx 12k) to pay off In Jan 2021.
And again for Jan 2022 when I can pay off approx 11k.
Just wondered if there's a better way to do it.
My mortgage is interest only.
I had the following ideas:
-change to repayment (but not sure how that affects the 10%)
-use regular savers and put in 250 a month in 4 different ones
- put 1k a month in an instant access saver
If anyone has any good ideas please let me know!

jamei305

What's the interest rate on your mortgage?

jamels2

2.69 per cent per annum

jamei305

Why not just pay off approx £1K per month as and when you have the money? I don't see any point doing it annually as the hassle in trying to beat 2.69% using regular savers is unlikely to be worth it.

AnotherJoe

Change to repayment (can you get a lower interest rate if you do, 2.69 is high) or pay monthly rather than saving up and making one payment.

kev2009

I also make yearly overpayments, i save what i can during the year and then at the end of the year i decide do i need the money etc and if not, then i use what i can to overpay the mortgage. Admittedly this isn't always the full overpayment limit but something is better than nothing

In similar position whereby interest on savings isn't really doing much for me so best to OP mortgage and when i can get on another fixed rate next year, hopefully it will be at a lower interest rate. My mortgage is a repayment mortgage, not interest only.

Kev

YorkshireBoy

jamei305 wrote: »

Why not just pay off approx £1K per month as and when you have the money?

With some providers there's a once per year additional payment window. Seem to remember Nationwide's is January?

I don't see any point doing it annually as the hassle in trying to beat 2.69% using regular savers is unlikely to be worth it.

Could possibly average up to 3% AER, but would need a couple of otherwise unnecessary current accounts, hence hassle.

Agree with others, the 2.69% mortgage rate could probably be beaten...and provide better overpayment options?

toothdoctor

Can you add and offset facility to the mortgage? If you can this may be worth exploring.

jamels2

The reason I ask im ahead of the schedule , Ive already paid this year's 14800 penalty free overpayment. In Jan I can pay 13320 and I currently have 10k in the bank. Once I've paid that 13320 in Jan I'll be working towards the 12k (approx) to pay Jan 2021.

YorkshireBoy

jamels2 wrote: »

...I currently have 10k in the bank.

You said earlier it was a current account. Presumably these funds are in a Santander 123 account making 1.5% AER?

How much work are you prepared to put in to double the return to 3% AER?

Ever had a Nationwide FlexDirect current account? And are there two of you?

jimjames

YorkshireBoy wrote: »

With some providers there's a once per year additional payment window. Seem to remember Nationwide's is January?Could possibly average up to 3% AER, but would need a couple of otherwise unnecessary current accounts, hence hassle.

Agree with others, the 2.69% mortgage rate could probably be beaten...and provide better overpayment options?

I'm with Nationwide and can repay 10% at any point up to the annual anniversary date