£7k to overpay or save?

mysmeg

Hi folks , myself and Hubby have 35k in rubbish savings account. New mortgage fixed at 5.19 starts in 3 weeks so there is time to transfer in £7k allowable overpayment , should we?  We have never done ISa,  never been great with all that , where is best to save and make regular monthly  deposits ?   Thankyou for any advice

Brie

Well if the interest saving is rubbish and the mortgage is 5.19% the immediate saving will be about £30 a month.  It's not a lot but it all adds up.  That's £1k over the next 3 years in your pocket rather than the bank's.  And savings like that tend to snowball.   

You might as well if you have the cash and it's not doing anything better.  

Yorkie1

Would doing this leave you without any emergency / rainy day savings?

imreadyforbed

id lock in the remaining savings after overpaying to a 6 month or 1 year fixed saving account. we have done this with fords and its 4% which pays monthly or at the end of the term . cant deposit regularly but you could put in better rate savings account ? 

id def overpay if your interest rate is 5.19% ( owch ) sooner its paid off the better X 

Newbie_John

Here's the list of savings accounts with best rates, you get 6.06% in one year fixed:
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

Assuming you're both on 20% tax (can save up to £1000 tax free) - I'd overpay £7k now and then open £14k fixed each - it will make £850 savings a year each.

For future savings there is 5% easy access which you can top up as you go although with your mortgage rate being higher it would be better to pay it off (all assuming you have some savings that can be accessed anytime).

mysmeg

Thankyou this is helpful !