Mortgage Overpayments vs Savings

As part of my journey to get to Mortgage Free, this next year is the start of reducing the term length and increasing monthly mortgage payments.

My outstanding balance is currently approx £153k and my current deal is due to run out Sept 24, the interest on my current deal is 1.04%.  I'll have 15 years left when my deal runs out.

I have the ability to pay off about an additional £500 a month or to put £500 a month into a savings account paying 5%/6%, then use that lump sum next august to pay down what is owed when i need to remortgage.

So, my question is, what is the best approach - overpayments month by month, or lump sum prior to re-mortgaging - is there an easy way to work this out?


  • la531983
    la531983 Forumite Posts: 838
    500 Posts Name Dropper
    edited 30 August at 10:02AM
    Given the mortgage interest rate is barely one percent, and the savings interest rate is five times that, this is a no brainer and no calculator is needed. Put the money into savings and pay it off your mortgage the day the fixed rate ends.
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