Overlay or invest ?.

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Hi,
I can over pay my mortgage by £520 per month at the minute. It takes off 4 years under this new 2yr fixed rate of 1.45
I was wondering if you think I would be better investing the money and paying it off as a lump sum or just take it off monthly.
Any advice would be very helpful
Thanks
C

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  • Nurse2047
    Nurse2047 Posts: 377 Forumite
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    edited 13 February 2021 at 11:09PM
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    I’m doing a bit of both, I found this very helpful when I had the same question https://youtu.be/r9k5ebqbSGM
    Nurse striving for financial freedom
  • keava
    keava Posts: 98 Forumite
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    Hi 
    thanks for the reply. How do you work out when you want to be mortgage free from?
    I started in 2012 with 25 years. In 8 years I’ve reduced the term to 12 years but still want it faster. Just started a new 2 year fixed. By the end of that I’m hoping to be at 8 years left.
    But fewer years would be better.
    Thanks c
  • Bargainhunter30
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    You can use the mortgage overpayment calculator on here and have a play around with figures:
    Mortgage Overpayment Calculator: Pay off your debt early?... (moneysavingexpert.com)
    Mortgage start date Nov 2014  - £90,545 over 25 years
    Re-mortgage Oct 2017 - 78,295 over 23 years
    Re-mortgage Jan 2020 - 55,000 over 26 years @ 1.94%
    Current Mortgage Outstanding Middle December 2020 - £
    47893.35 - a reduction of £42,652 in just over 6 years!  


  • Coffeekup
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    keava said:
    Hi,
    I can over pay my mortgage by £520 per month at the minute. It takes off 4 years under this new 2yr fixed rate of 1.45
    I was wondering if you think I would be better investing the money and paying it off as a lump sum or just take it off monthly.
    Any advice would be very helpful
    Thanks
    C
    I'm far from an expert at giving financial advise. But what I do know mostly comes from website.
    It depends on many variables...
    How old you are?
    Do you have any other debt? (Especially with higher interest).
    How much you earn (tax brackets) and how much you pay into a pension?
    Disposable income?
    Do you have any other savings? Ideally you want something to fall back on if hard times hit.
    Would overpaying X amount for the next 2 years make you fall in to the next LTV bracket when you're current fixed rate finishes? 
    How risk adverse you are with investing?
    I'm sure there are other things which I can't think, which others may help with.

  • Viking_mfw
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    The savings and investment board folks would say that 4 years is too short to be investing. 
    If you can find something to *save* into that beats 1.45% then that's a good vehicle. If you *invest* then you need to be ready not to have made any profit in 4 years, or even for the value of your investments to have gone down. Long term they will probably go up - but you might not have that money available to pay off your mortgage for 15 or 20 years. How would you feel then? 
  • Albermarle
    Albermarle Posts: 22,563 Forumite
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    As above . Minimum term for investments is 5 years , preferably more than 7 years and ideally 10 to 15 years . This gives time for the ups and downs in the market to even themselves out.
    When you invest for the long term like this it is usually better to do this via a pension , due to the tax relief. 
    If you can find something to *save* into that beats 1.45% then that's a good vehicle
    No safe savings accounts are paying over 1.45% as far as I am aware.
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