£500pcm. Mortgage overpayment or savings.

wmb194

Depending on the timescales and the need for access you have in mind you could open a new fixed rate saver every month. Many have small minimum deposits e.g., Atom's is £50 (fifty).

Beddie

The actual monetary difference between the two options is small. I'd do £250 into savings and £250 mortgage, because that would feel most comfortable to me personally - building savings and hacking into the mortgage.

Exodi

Beddie said:

The actual monetary difference between the two options is small. I'd do £250 into savings and £250 mortgage, because that would feel most comfortable to me personally - building savings and hacking into the mortgage.

This is just a classic argumentum ad temperantiam and is commonly used where people are adverse to change.

The difference between paying £500 p/m into the Regular Savers (using the two I linked as an example) and overpaying the mortgage is £67.93 in interest at the end of the year.

I don't personally earn £67.93 an hour after tax at work, so for me it would seem a highly profitable use of an hour setting up the Regular Saver accounts and standing orders - but appreciate that it may not be worth it for others.

What I don't understand is the suggestion to spend the time setting up regular savers paying higher interest - and then deliberately not taking full advantage of them because one 'feels most comfortable' doing an odd half/half overpayment arrangement. If one values 'building savings' (which I presume means the comfort of knowing they have a pot of money they can fall back on an in an emergency) then the case for putting all the money in Regular Savers is even clearer.

Please note, First Direct places a hefty interest penalty for early withdrawal. You should only consider this particular Regular Saver if you are certain you won't need the money for the 12 months.

B0bbyEwing

Exodi said:

Doctor_Who said:

Sg28 said:

jinkssick said:

kwangomango said:

jinkssick said:

Hi, just wanted to get your thoughts if I should save £500 per month on a 6.05% 1 year fix (no tax) or same amount into a mortgage 4.58% (170k remaining)? 

Thank you.

You can't save monthly on a fixed rate though, can you? It's normally a lump sum locked away till the maturity date.

Sorry, my oversight, you are dead on the money.

But you can use regular savers instead.

And they pay upto 7%. The OP may need a couple of RS accounts for £500 per month due to funding limits.

Regular savers pretty much fit the bill perfectly.

As you say, they'll need more than one - maybe £300 into first direct @7% and £200 into natwest @6%.

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

Match made in heaven with the OP's circumstances.

BikingBud said:

Try this: http://locostfireblade.co.uk/spreadsheet/Index.html

You can investigate and understand you own best options.

I don't think you need a fancy spreadsheet to work out that 6% > 4.5%

While true, some people prefer not to give straight answers to questions it seems. 

Maybe BB is one of those people. 
Or maybe not.