Paying mortgage vs liquidity of saving 24 January 2021 at 7:02AM in Mortgage-free wannabe 8 replies 201 views

Michael_Bear

Hello, after some advice please.
Large mortgage, tracker rate (base+0.64=0.74%) but due to go 1.49%(ish) in September on fix (probably).
No other debts.
Savings (0.5-0.61%).

I'm looking at paying off some of mortgage but wondering how much savings to hold back as emergency fund? (Outgoings in a normal month £3000, Covid times £2600, If we lost our jobs/frugal £2300).

I'm overly worried about losing jobs ect so put off paying any of mortgage off but looking for clever people like yourselves to give indication of whats a fair emergency fund.
TIA

Tartan_Mum

We have similar figures to you re minimum expenses and have a year’s worth of emergency fund savings. We have jobs with a fair degree of uncertainty so needed a decent cushion to feel comfortable before committing to OP to the mortgage. 

I think a lot of it is personal with a whole range of individual factors incl location, job type, industry etc. 

Hope this helps! 

rugbymadfamily

I think it depends on your job stability / job market. My husband and I are aiming for 3 months of emergency funds and then will start OPing the mortgage. But we both have very stable jobs (neither affected by COVID) and large job market at this time. If our jobs were in riskier sectors I would definitely want more like 6 months to a year.

longway2go

We are aiming for 6 months but it depends on circumstances. 

Michael_Bear

Thanks for comments. We have relatively unstable jobs so I'm thinking £2300 (frugal spend not our actual outgoings)x 12 months = £27600 required in accessible savings seems to conservative but appropriate amount.

I also believe its appropriate to use frugal amount as wed receive JSA/critical illness cover so income wouldnt be 0.
Thanks again

Cornish_mum

Hi we also hold 12 months as EF because my job is always precarious and as we have DD and DS relocation for a new role would be very challenging.  Also I am a bit of a pessimist so tend to plan for the worst. We had a patch about 10 years ago when we ran our EF down (to buy a house in a nicer area). (Previously to that we were in a terrace living next door to an alcoholic who had accidentally set their house on fire and there was flying tipping in our back lane with an associated rat problem). I don’t regret making the move to relocate but we were really up against it money wise for a couple of years and it’s not an experience I ever wish to repeat. CM

BookmobileBadGirl

I also have 12 months of budget for my emergency fund. My job is relatively secure (though with COVID who knows) but I work in a niche area so I know it would take time to find the right post.

caeler

3-6 months worth of bills and spends is what I like to maintain. 

Michael_Bear

Thanks again for the replies. All input appreciated with my solution being 12xfrugal monthly spend in accessible cash ISA. Great to hear other people's thoughts.
Thanks again all