Overpay or not?

nirvana231976

Good morning! We have recently remortgaged and our monthly payment has increased to £1690 from £1475 and instead of having 9 years remaining on our mortgage , we have had to add 1 year in order for the mortgage to be realistically affordable. Is it worth overpaying at the current state of interest rates as my wife and I discussed and agreed that we are able to overpay £200 every month, or save the money over the 2 year mortgage period and overpay instead when we next remortgage?

jackieblack

I’d say that it depends whether the interest rate you can get on your savings is more or less than the interest rate on your mortgage.
eg the interest rate on my mortgage is increasing to 5.99% but I have a regular saver account earning 8% so, for me, it makes more sense to pay into the regular saver every month and pay the lump sum off the mortgage at the end of the year when it matures.

MorningcoffeeIV

nirvana231976 said:

 Is it worth overpaying at the current state of interest rates 

As above, it depends on your current interest rates.

What are your mortgage and savings rates?

nirvana231976

MorningcoffeeIV said:

nirvana231976 said:

 Is it worth overpaying at the current state of interest rates 

As above, it depends on your current interest rates.

What are your mortgage and savings rates?

Current mortgage rate is 5.19%. My savings account with Chase gives 4.1 %.

Edi81

nirvana231976 said:

MorningcoffeeIV said:

nirvana231976 said:

 Is it worth overpaying at the current state of interest rates 

As above, it depends on your current interest rates.

What are your mortgage and savings rates?

Current mortgage rate is 5.19%. My savings account with Chase gives 4.1 %.

You overpay the mortgage

bluelad1927

While I agree with all the above about interest rates, its also worth considering if you are likely to dip into those savings because the money is available to you. If like me there is that possibility then the money is better off the mortgage

Newbie_John

Best easy access ISA is 5.09%, you extended your mortgage to pay less so it's more affordable - so you are / could possibly be in need of cash if things go not as wanted.

I'd open that easy access ISA and pay money there instead. Not overpay mortgage right now.
If the ISA rate drops significantly then you can always revisit situation and release some cash from it towards overpayment - but I wouldn't do it right now.

amanda1024

nirvana231976 said:

MorningcoffeeIV said:

nirvana231976 said:

 Is it worth overpaying at the current state of interest rates 

As above, it depends on your current interest rates.

What are your mortgage and savings rates?

Current mortgage rate is 5.19%. My savings account with Chase gives 4.1 %.

I'd get a better savings account - >5%. Regular savings (which would work well for your £200/month) are even higher

Archerychick

You could put that £200 into a regular saver and get 6-7% interest. Plus you then have the added benefit of having access to the funds if you need them

Huffnagel

I have a few regular savers from last year, but I'm a bit sceptical. I'm paying £300 per month into a reg. saver which will give £136.50 per year on maturity. This is at 6-7% interest. Not a lot.

Not sure how this compares to my overpayments as I will have to wait for the annual mortgage statement.

Archerychick

Huffnagel said:

I have a few regular savers from last year, but I'm a bit sceptical. I'm paying £300 per month into a reg. saver which will give £136.50 per year on maturity. This is at 6-7% interest. Not a lot.

Not sure how this compares to my overpayments as I will have to wait for the annual mortgage statement.

What is it you’re sceptical about? If your regular saver is paying you say 6% and your mortgage rate is lower than that, then you’ll earn more by making the regular saving payment - storing that up until either the interest drops below your mortgage rate or your deal ends