When to overpay question

slide_lewy01

I'm hoping someone can give me some advice on when to overpay my mortgage. I currently have a fixed mortgage with Barclays at 1.44% which is due to end May 2023. I have some money put away to overpay my mortgage (10% of my remaining balance as per banks guidelines) but I'm wondering when it is best to use this lump sum to overpay. In the overpayment guide released last week by moneysavingexpert it says:  Older fixes: Your rate is likely still cheap, possibly below 2%, while the top savings rates are 2.5% easy-access or 4.2% for a year's fix. So, saving is likely to win. If so, put the money away UNTIL your mortgage fix ends (timing fixed savings to end then too is useful) and at that point, consider using it towards reducing your new likely-much-higher-rate mortgage. So to me this suggests I should put my lump sum into savings until May 2023 and then once I have remortgaged probably at a rate of around 6, I should use the lump sum then and pay then so I'll save on the interest at 6% (calculated around £50k), and not overpay now as I'll only save the interest on the 1.44% (calculated around £11k). 

I have seen some many different comments on twitter saying this is not the case and just overpay now and there's not much advice on this when I google it, so a bit confused about it all. If anyone has any advice for me I'd greatly appreciate it.  Thank you in advance. 

penners324

What interest rate is the savings getting?

Probably best to put on the mortgage now.

penners324

Your interest calculation is irrelevant. It's the capital amount that matters.

slide_lewy01

penners324 said:

What interest rate is the savings getting?

Probably best to put on the mortgage now.

I can get a 6 month fixed for 3%, so beats the 1.44%. So it might be best to save the money for 6 months at 3% and then use it when my mortgage becomes higher than my savings rate, is that correct?

propertyhunter

Remember to account for any income tax you might have to pay on the savings. 

Coffeekup

Barclay's do something called blue rewards, if you have an account with them and have 2 direct debits going out a month the £5 fee is waived. You have a mortgage with them so you'll get paid £3 a month for that and they have a rainy day saver linked to the blue rewards which gives 5% on Balances up to 5k.

As for when you should overpay? Early as possible as you will be paying less interest on a smaller balance than a bigger balance. If you overpaid your 10% allowance for this yea, wait till you can overpay 10% again.

As others have said your mortgage rate is cheap and savings rates are on the up finally. So need to work them number's.