Interest only

Dorastar

Bought at the wrong time and taken us years to get back into equity but managed to get some of mortgage onto repayment with a lot on interest only still. On a fixed rate for both parts of mortgage till next December but have a bit of money stashed and able to repay a bit over the next 12 months due to a change at work. Is it worth paying down the interest only part as much as we can or stashing it in savings for the time being? Understand the whole savings v mortgage interest rates argument but wondering if getting the I/O part down as soon as possible will help us more in the longer term.

CSI_Yorkshire

Dorastar said:

 Understand the whole savings v mortgage interest rates argument but wondering if getting the I/O part down as soon as possible will help us more in the longer term.

It's exactly the savings vs interest argument.

Dorastar

So stash it in savings as they're higher for now, still feels like we're not actively doing anything but that's a mind thing I need to get over I guess. 

CSI_Yorkshire

Dorastar said:

So stash it in savings as they're higher for now, still feels like we're not actively doing anything but that's a mind thing I need to get over I guess. 

It's a really hard thing for many people to get over - just look at how popular the Mortgage Free Wannabe board is.  I don't even follow my own advice, because I sentimentally like the idea of overpaying even at an extremely low interest rate.

If the same amount of money would reduce your mortgage interest by £40 per month or could earn you £50 per month in savings, it seems obvious where it should go.

Plus you you would still have the amount in savings to pay off the mortgage balance when it is due.

Dorastar

Going to have to build a spreadsheet for savings going up rather than going down, it's a real mind thing for sure!