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Mortgage Overpayments vs savings
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Gareth77
Posts: 50 Forumite


I currently have a mortgage rate of 1.27 that is fixed for another 3 years
After that I will have 14 years remaining with £287,000 left to pay.
My plan is therefore to start overpaying from this point onwards to reduce the amount remaining.
I see some people say they to save then overpay rather than just over pay. Does this make sense? How much more can you save by doing this?
All advice appreciated!
After that I will have 14 years remaining with £287,000 left to pay.
My plan is therefore to start overpaying from this point onwards to reduce the amount remaining.
I see some people say they to save then overpay rather than just over pay. Does this make sense? How much more can you save by doing this?
All advice appreciated!
0
Comments
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give this thread a read:
https://forums.moneysavingexpert.com/discussion/6454500/confused-about-overpayments#latest
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Gareth77 said:I currently have a mortgage rate of 1.27 that is fixed for another 3 yearsRemember the saying: if it looks too good to be true it almost certainly is.2
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where is the best place to get a 4% rate? My current Natwest rate is 1.75.
Also the repayments are limited per calendar year - so I assume I need an account where I can withdraw every December?0 -
Gareth77 said:where is the best place to get a 4% rate? My current Natwest rate is 1.75.
Also the repayments are limited per calendar year - so I assume I need an account where I can withdraw every December?
Go to the savings board as there are many accounts paying 4% or close to it.1 -
just overpay when you come to renew the mortgage to reduce the balance - no need to withdraw and overpay.
If you head over to the savings board there's plenty of threads on there in regards to best interest rates.0 -
Gareth77 said:where is the best place to get a 4% rate? My current Natwest rate is 1.75.
Also the repayments are limited per calendar year - so I assume I need an account where I can withdraw every December?Remember the saying: if it looks too good to be true it almost certainly is.1 -
Be aware that once you earn £500 as a higher rate tax payer and £1,000 as a lower rate tax payer you get taxed.
So look at Cash ISA,s and maybe regular savers plus overpaying the mortgage2 -
How much will they tax me on my savings? (I am currently a higher tax payer) - does that mean, it's actually better to just to d the overpayments rather than building up a savings account?0
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Gareth77 said:How much will they tax me on my savings? (I am currently a higher tax payer) - does that mean, it's actually better to just to d the overpayments rather than building up a savings account?
It's still not worth paying off the mortgage with a rate that low, but you will not be actually getting the headline rate after tax, unless you put it in an isa.0 -
As a higher rate tax payer you get hit with 40% tax on any income earned so Cash ISA,s may well work out better 👍0
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