Mortgage Overpayment - suggest something better

Albermarle

chilswelluk said:

jimjames said:

Why do you have low rate savings when you can get 5% for them? That's a significant difference.
Same with the mortgage, there is no point to pay off that amount at 1.89% when you could be making more by saving it instead. You're missing out on hundreds of pounds by doing so and far better for that to be in your pocket than the bank.

I don't know if I agree with this, as there are often different factors at play and it does not always come down t o basic number crunching.  I used to move my money about all the time to get the best rate on savings.  These days I just throw it all at mortgage over payments and a pension.  I basically have zero savings.  Years ago I had a lot in savings and I lost my job.  Due to the amount I had in savings I was prevented from claiming benefits.  The money I spent supporting myself while unemployed far outweighed the benefits I derived from savings, compared to if I had been allowed to claim benefits.  If I loose my job now, I have peace of mind knowing that I can claim benefits and have paid a large chunk of my house off and built up a very decent pension pot.

It is an alternative view that seems to work for you.
However this forum is mainly frequented by new and regular posters, for who claiming benefits does not really cross their horizon as a strategy, only as a last resort.  So in that case having a cash savings back up is what brings peace of mind,

Altior

It's a valid point that the welfare system rewards the feckless and not the prudent. It is a factor to consider, depending upon personal circumstances. I only have one income, and a few years ago I had the opportunity to rent or buy a property via mortgage. If I lose my job I get nothing for housing, but my rent would be paid by other taxpayers. I did factor it in my decision making. 

On these boards though we have to take the broader case as we aren't privy to the minutiae of personal circumstances (unless proffered). ie assume that the poster asking this type of question is not concerned with the thresholds for various means tested benefits.

Personally, I feel having access to the liquid cash supersedes hypothetical concerns around access to benefits. As you want the safety net of being able to carry on paying the priority bills, even if losing the main stream of income.

Beddie

chilswelluk said:

jimjames said:

Why do you have low rate savings when you can get 5% for them? That's a significant difference.
Same with the mortgage, there is no point to pay off that amount at 1.89% when you could be making more by saving it instead. You're missing out on hundreds of pounds by doing so and far better for that to be in your pocket than the bank.

I don't know if I agree with this, as there are often different factors at play and it does not always come down t o basic number crunching.  I used to move my money about all the time to get the best rate on savings.  These days I just throw it all at mortgage over payments and a pension.  I basically have zero savings.  Years ago I had a lot in savings and I lost my job.  Due to the amount I had in savings I was prevented from claiming benefits.  The money I spent supporting myself while unemployed far outweighed the benefits I derived from savings, compared to if I had been allowed to claim benefits.  If I loose my job now, I have peace of mind knowing that I can claim benefits and have paid a large chunk of my house off and built up a very decent pension pot.

I have been in exactly the same position - job loss yet no access to benefits as I'd "foolishly" built up savings. I should have done the same as you.