Overpay mortgage or invest?

CG2017

Hello everyone, 

I have recently started a new job, part time, bringing in around £900 per month.  I am in the fortunate position where I got a job to get back into work to kickstart my career again, rather than needing the extra income.  I also support my other half in running a business which brings in around £4000 per month and we cover all of our expenses and savings with that.

Initially, I thought about using the extra money to overpay our mortgage, this is fixed until 2026 at 2.09% but I have read if you can source a savings account at a higher interest rate than what you are paying on your mortgage, then put your money into that - there are longer term savings accounts at around 3% at the moment.

But I am also thinking about stocks and shares ISA?  We do have one already, we deposited in a lump sum but we have yet to deposit regular monthly amounts in, should I consider topping that up as a priority?

I am contributing to a pension through work, and we already have a pension that we contribute to through the business monthly, and we top that up on an annual basis also depending on the position of the business.

We are looking at moving home in around 3/4 years so we would like our money to be invested in a place where it can attract as much 'growth' as possible

I would be interested in peoples thoughts?  Thank you

george4064

If you want as much growth as possible then invest it. Sounds like your pension is in a good place so stick it in a S&S ISA.

masonic

CG2017 said:
We are looking at moving home in around 3/4 years so we would like our money to be invested in a place where it can attract as much 'growth' as possible

Does this mean that the money you are considering investing will be used towards your house move in 3-4 years time? If so then there is a fair amount of risk involved in investing it for maximum growth. If, however, this is money that you will not need and could invest for 10+ years and preferably even longer, then you could consider such a strategy. You should consider what your mortgage interest rate might become after your fix ends and/or you remortgage owing to the house move.

Nebulous2

Ultimately you need to make up your own mind.

Savings rates may just about beat your mortgage.

Investing can be rewarding, but also is risky, with that risk being reduced for longer timescales.

Paying down your mortgage will increase your equity available for a move and will reduce your interest. You may have a limit as to how much you can pay without penalties.

Remember this doesn't have to be all or nothing. You could split it for example, £300 each way to saving, investing and overpaying the mortgage.

P1Fanatic

If you are bookmarking these savings for a house move in 3-4yrs then a S&S ISA is probably too much risk. The one unknown is what mortgage rates will be like when you come to renew in 2026. Normally fixed rate mortgages allow a max of 10% overpayment per year before incurring charges so depending on your balance £900 pm may soon hit that cap. I think Nebulous idea above of a 3 way split covers all the bases and lowers the risk. If your investment does well by the time you need it to move then all good. If not just leave it there.

Albermarle

so we would like our money to be invested in a place where it can attract as much 'growth' as possible

So does everybody ! but unfortunately it is not as easy as that as there are no guarantees with investing.

This pension vs S&S ISA vs overpaying mortgage question comes up regularly, and the usual answer is do a bit of everything to hedge your bets ( as already suggested) 

Doshwaster

It doesn't have to be mortgage or invest, you could split your money and do both.

Olinda99

I overpay my mortgage. Just a personal preference of seeing it go down. 

Millyonare

Think it depends on one's personal mindset, age, future salary, tax bracket, and attitude to risk.

* Low risk = pay down mortgage
* Mid risk = pay down mortgage + invest in stocks
* High risk = invest in stocks

Not investment advice, etc. Dyor.

CG2017

masonic said:

CG2017 said:
We are looking at moving home in around 3/4 years so we would like our money to be invested in a place where it can attract as much 'growth' as possible

Does this mean that the money you are considering investing will be used towards your house move in 3-4 years time? If so then there is a fair amount of risk involved in investing it for maximum growth. If, however, this is money that you will not need and could invest for 10+ years and preferably even longer, then you could consider such a strategy. You should consider what your mortgage interest rate might become after your fix ends and/or you remortgage owing to the house move.

Yes possibly....yes I need to consider that if we are looking at moving, thank you 

CG2017

Thank you to everyone for taking the time to reply, I think we will look at spreading this out over 2/3 options