10% overpayment or save it?

rpclarke

We're about to start year 4 of our 5 year fixed mortgage. Our balance is £54,000. We pay £822 a month @1.14%.

We have paid our 10% overpayment allowance at the start of each year of the deal.
This year's overpayment will be £5,400 and at such a lower interest rate it doesn't really knock much off the actual interest figure per month.

We have about £10,000 in premium bonds and add about £800 a month into it. This is where we usually take our overpayment from.

I'm now thinking we'd be better off keeping it all in the PBs and letting the pot build up or open an ISA rather than pay our 10%?

Anyone in similar position or advice what to do?
Thank in advance 

Andyjflet

You need the overpayment to reduce the principle balance not the interest figure. In most cases overpaying the mortgage will significantly save you money. Have you typed this into the mortgage overpayment calculator on this site? 

rpclarke

My £822 is a fixed payment through the remaining deal. I understand the overpayment of £5,400 will come off the principle balance but will this just not mean slightly more of the 822 is capital and a little less is interest?