Overpay mortgage or save

bluelad1927

Hi

I'm just over a year into a 10yr fixed at 1.95% and total mortgage 17yrs.

Currently overpay £200 a month but am sure that I read that with better savings rates at the moment I'd be better saving to pay the mortgage later.

This sort of makes sense to me but seeing the mortgage decrease every month is more appealing and more consistent not having to revert each time the savings rates change

Am I really doing the wrong thing directly overpaying the mortgage?

Thank you

tizerbelle

Its an "it depends" answer.

If you put the overpayment money into savings accounts that earn over 1.95% then it will earn more interest than the interest you avoid paying on the mortgage if you do overpay.  You can then use those savings at the end of the fixed term to reduce the amount you would need to remortgage.

If you know this and are happy to "sacrifice" that extra interest for the satisfaction of seeing your mortgage balance reduce every month, then continuing to pay down the mortgage is fine for you.

bluelad1927

tizerbelle said:

Its an "it depends" answer.

If you put the overpayment money into savings accounts that earn over 1.95% then it will earn more interest than the interest you avoid paying on the mortgage if you do overpay.  You can then use those savings at the end of the fixed term to reduce the amount you would need to remortgage.

If you know this and are happy to "sacrifice" that extra interest for the satisfaction of seeing your mortgage balance reduce every month, then continuing to pay down the mortgage is fine for you.

Thank you, so I'm correct in thinking im not missing something glaringly obvious then that would impact saving it instead