Overpay mortgage rather than save now?

DiggerUK

Even if the only pension income anybody has in retirement is a State Pension, the bills should be covered. Providing of course that people have been  sensible and  killed the mortgage and other debts before retirement age.
Putting the roof over your head at danger is a fools game, especially for the pennies you get by stoozing  twixt savings accounts and mortgage. The inflation shortfall is just putting bigger holes in the ship you are sailing..._

p.s., Digger Mansions moved all our savings, from whatever source, in to gold from about 2002ish. It wasn't the original plan to put everything in to gold, but it turned out to be the wise move.  That, together with our State and  DB pensions, is giving us all the opportunities  we need to destroy a very extensive bucket list. Despite constant ridicule for our gold plan, we  are shown to "have chosen wisely". 

Our average gold cost has been under £650 per ounce, it is currently £1375 an ounce..._

grumiofoundation

DiggerUK said:

Putting the roof over your head at danger is a fools game, especially for the pennies you get by stoozing  twixt savings accounts and mortgage. The inflation shortfall is just putting bigger holes in the ship you are sailing..._

Don't be so ridiculous. You aren't putting the roof over your head at risk by holding cash rather than overpaying your mortgage. 

P. S. You are still claiming not to understand how inflation works I see.

DiggerUK

OP interest rate down from 1.1% to 0.4%. UK inflation 1.7%. Real interest rate -1.3%
Mrs.D told today that her N/W 10yr Loyalty ISA down from 0.95% to 0.2% UK inflation rate 1.7%. Real interest rate -1.5%..._

bowlhead99

DiggerUK said:

OP interest rate down from 1.1% to 0.4%. UK inflation 1.7%. Real interest rate -1.3%

When you have a mortgage, the inflation rate reduces the cost of that mortgage debt, just like it reduces the real value of savings.

Putting the roof over your head at danger is a fools game, especially for the pennies you get by stoozing  twixt savings accounts and mortgage.

If you have six months' living expenses (including mortgage payments) in a savings account and choose to keep it there for emergencies or uncertainties rather than pay down extra from the mortgage, you are not 'putting the roof over your head at danger'. The whole point is to be able to cope with danger - because when you have a large unexpected expense or drop in income you would still have money on hand to service your expenses (including the mortgage), rather than be short of cash and risk getting behind on the mortgage payments and thus 'putting the roof over your head at danger'.

In essence what you are buying, for your [small amount of interest rate differential between the debt and the savings] is flexibility to cope with emergencies. Like most insurances, one pays for it but hopes that paying the premium will turn out to have been the wrong move, with hindsight.

AdmanPea

Wow, that escalated quickly! An enjoyable read though. 

I am not looking to use my six months of expenses to overpay mortgage but my situation is such that I could overpay each month from now on (double the amount) and keep my emergency fund in tact. The alternative is to keep adding money to the pot that I have for no real purpose other than just in case (which may actually be a noble and smart one). 

It would seem that long term investments would be the thing that yield the greatest results but I really don't know where to start. 

I'm about to turn 33 and my mortgage isn't due to be paid off until 62. In an ideal world (yeah right) I will get it paid off long before then but I am keen to maximise my money in a sensible way (as I imagine we all are). I bought my flat at a time when I was in a much different financial position. My outgoings, if anything, have reduced and my income has increased. Whilst not impossible, I would be surprised if my job were at risk in the future (obviously nothing is certain and pain is coming). 

I just want to make the best informed decision I can moving forward as my excess cash is going nowhere at present (which may be fine under current circumstances).

Ta