Mortgage Free Wannabe - Save or Overpay

**woody123**

Hi,

I was unsure which board to post but as I do want to be mortgage free by April 2027 I thought this may be the best place.

£38,000 owed on mortgage term 13yrs 3months with Santander.
Was fortunate enough to be able to fix earlier this year for 5yrs at 1.64% until April 2027.  
Contracted monthly payment is £268 per month but overpaying to increase the payment to £500 per month.

I currently have 14K worth of savings in an account paying 2.75% interest.  I think the most I could possibly save a year would be 3K to 3.5K without overpaying.

I want to be in position to pay the mortgage off in full by April 2027 as I'm concerned what the interest rate may have risen to.  Does it sound a good idea to stop overpaying and instead place the money in my savings account?  I'm hoping that by April 2027 my savings will have exceeded the amount owed on my mortgage.  I don't want to be in a position at the end of fixed term where I don't have the money to pay off in full and end up paying a much higher rate of interest.

**woody123**

Just wanted to follow up with a question.

would my mortgage provider allow me to pay off a lump at the end of my fixed deal? If yes, then I could find a another fixed rate with the remaining balance.

Ramouth

We are following the same strategy as you, saving overpayments in a savings account rather than paying off the mortgage balance.  It is my understanding that once we get to the end of our 5 year fix there is no ERC or overpayment limit so we can pay off the lump sum if we wish to.  If my calcs are correct (and we don’t spend the cash on improvements) we will be left with around 30k to remortgage.  Last time we were in this position (we were MF before moving last summer) there was no point in getting another fix though because the fees outweighed the benefit of reduced interest rate.  Good luck with your savings!

**woody123**

Thanks for the info. I’ll certainly see if I can pay in full or pay a large chunk at the end of my current fix. Good luck with your savings too.