We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
Overpay current mortgage or save for deposit to move up the property ladder
TCvii
Posts: 3 Newbie
Hi there,
I would really appreciate anyone's input here in case I am overlooking anything.
My current fixed-rate mortgage is sadly expiring next month and I am moving over to a tracker mortgage. I maxed out the overpayment limit allowed during my fixed term and in the meantime was saving as much as possible. As I'm moving over to my tracker mortgage I am able to overpay with no limit...
So my big question is, should I overpay my tracker mortgage as much as I can OR should I save the money and keep it to one side for a deposit on a house?
In case important - I would hopefully plan to move in the next year or so. I would also be looking to move up the property ladder from shared ownership 1 bed flat to a 2 (or preferably 3) bed house and I would predict this would cost at least 4x the value of my flat.
I know overpaying a mortgage is generally seen as the priority, but as I plan to move up the property ladder soon would this still be the case? In my mind, I think it would be sensible to decide to continue to save money for a deposit rather than overpay on my current mortgage.
My thinking is, with going up the property ladder and the value of a mortgage inherently increases with it. Unless mortgage rates drastically drop off (which seems unlikely) - it would be most cost-effective to reduce the overall total of a new mortgage by paying a larger deposit.
Is my maths correct or have I drastically overlooked something?
Thank you!
Tom
I would really appreciate anyone's input here in case I am overlooking anything.
My current fixed-rate mortgage is sadly expiring next month and I am moving over to a tracker mortgage. I maxed out the overpayment limit allowed during my fixed term and in the meantime was saving as much as possible. As I'm moving over to my tracker mortgage I am able to overpay with no limit...
So my big question is, should I overpay my tracker mortgage as much as I can OR should I save the money and keep it to one side for a deposit on a house?
In case important - I would hopefully plan to move in the next year or so. I would also be looking to move up the property ladder from shared ownership 1 bed flat to a 2 (or preferably 3) bed house and I would predict this would cost at least 4x the value of my flat.
I know overpaying a mortgage is generally seen as the priority, but as I plan to move up the property ladder soon would this still be the case? In my mind, I think it would be sensible to decide to continue to save money for a deposit rather than overpay on my current mortgage.
My thinking is, with going up the property ladder and the value of a mortgage inherently increases with it. Unless mortgage rates drastically drop off (which seems unlikely) - it would be most cost-effective to reduce the overall total of a new mortgage by paying a larger deposit.
Is my maths correct or have I drastically overlooked something?
Thank you!
Tom
0
Comments
-
Your current property, and the equity in it - will BE your deposit for a future move though.
If it were me, I'd balance making OP's against the current mortgage alongside ensuring that I had money in the bank for all costs to do with the move - agents fees, legals, stamp duty, removals....the lot. Those savings could be stashed into a limited access savings account which would let you get at them when needed, but may pay a higher rate than easy access. (If you were sure it would be over a year away when you'd need the funds, then regular savers might also be a good option here).🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00
£100k barrier broken 1/4/25
Balance as at 31/08/25 = £ 95,450.00. Balance as at 31/12/25 = £ 91,100.00
SOA CALCULATOR (for DFW newbies): SOA Calculatorshe/her1
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 354.6K Banking & Borrowing
- 254.5K Reduce Debt & Boost Income
- 455.5K Spending & Discounts
- 247.5K Work, Benefits & Business
- 604.4K Mortgages, Homes & Bills
- 178.6K Life & Family
- 261.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.7K Read-Only Boards