Annual mortgage overpayment or overpay at end of product

stewart-page

Hi there, we currently put our mortgage overpayments into two 8% interest savings accounts. We had planned to wait for the interest to mature and pay these overpayments annually, but I wondered weather we should be sitting on them for longer so more interest will be gained? Our product 

stewart-page

Our product is a fixed mortgage at 1.99% and we have 8 years remaining on it. Many thanks for any advice.

la531983

If you are getting 8% interest, even with the tax on that its a no brainer. Keep saving. Dont overpay the mortgage until the rate the mortgage is on is higher than the rate of interest the savings account gets (or until you save enough to clear the mortgage)

Le_Kirk

Maybe better posting on a mortgage/financial type forum rather than this one, which is for all things techy!

cerebus

Le_Kirk said:

Maybe better posting on a mortgage/financial type forum rather than this one, which is for all things techy!

What he said

lr1277

What others have said about moving this thread.
You could consider the following:
Your tolerance for having a debt. Is it a burden or a necessary financial product?
What are the terms of your mortgage with respect to overpayments? Is the reduced amount.owed reflected in next month’s payment?
If you ask somebody who doesn’t like having any debt and that is their top priority, then overpaying the mortgage straight away might be your answer.
If you ask someone who enjoys saving and investing they might say save till the end.
Other considerations are will the savings interest affect the tax you pay? At 8%, you would only need to have more than £12500 saved (earning £1k interest) before your tax position might be affected. I am not an expert on this so you would need to investigate further if you think this might affect you.
Are you disciplined enough to not dip into the savings if something desirable comes up? Obviously you would dip into the savings if something essential came along.
HTH