Probably a dumb question!

FairyElephant_2

Apols if this is dumb - my normally active brain has been stuffed up with hayfever and I can't think straight!

Am currently making overpayments of c.£200 month against a 5.19% fixed rate mortgage, which has a little over 2 years to go at fixed rate, then will go variable unless I fix again.

It seems to me that I'd be better off paying that £200 into the new Halifax 10% regular saver for a year, then using the money saved +interest to pay a lump sum off the mortgage. I'm allowed to save up to £500 month in the reg. saver, but don't have that much to save unless I use some of the mortgage OP money....

Am I missing something? - It seems too simple, but as I said my head is not on straight today!

FE

JonnyBravo

You are correct.
Quite how much of that 10% you get will depend on your tax rate but even at higher level it is marginally better following the route you have outlined.

dimbo61

are you using your tax free ISA first ? 6/6.5% tax free
10% saver from halifax only works out at 5.58% for the year ( I have one )
limited amount to be paid in £500 max each month and one year term only.
and dont forget the tax man !

FairyElephant_2

Thanks for your help guys.

Yep - did my ISA in April with funds from Last Year's Reg Saver (7%) which matured at end March. It's at a fixed 6.25% for the year.

I pay tax at 20%.

I will carry on saving £250 a month from my salary as before, but this time into the 10% saver (done this every year for past 3 and then put matured sum into ISA in April - ready to probably pay lump sum off mortgage when fixed rate ends!)

BUT now the 10% Reg Saver lets you save £500 a month, I'm thinking that I'd be better off sticking our £200 mortgage overpayment in there as well....

AND if I cut DH's 'beer/spending-money' down to a really bare minimum then we could stump up the other £50 month to make the max £500 month (not raised that one with him yet - a 28% cut in his 'pocket money' might be really pushing it - better get him in a really good mood first! LOL!).

ailuro2

FE - remember overpaying is about stuffing it to the banks and saving years on your mortgage without going without yourself.:p

You need to have treats along the way or you'll be sitting in a lovely house but not have any happy memories of what you did during the time you've been living there.


If, however you and DH get about £200 a month spending money EACH :eek:, then that MIGHT be able to be whittled a bit to put the excess into a holiday fund.:beer:

FairyElephant_2

Thanks ailuro - we get about £30 or £40 week each, but need to buy petrol (ouch at the moment!) out of that, and pay for stuff like clothes, pressies, sport activities, haircuts etc.
We also put £100 away in a 'holiday fund' every month, and a bit more if the DH gets any overtime (rarely) and if I get an annual bonus (hopefully!).

So all in all I reckon we are doing alright at the moment, and although we live quite 'carefully' we're not too deprived of 'treats'! I quite agree - you've got to 'live a little' along the way.......