overpay or save ? how does tax take into account ???

If you are a standard rate tax payer then the HSBC online saver will pay you 3.8% interest per year: this is currently less than your mortgage rate, so in theory you would be better off using your savings to reduce your mortgage. You should, however, ensure that you retain some savings as an emergency fund to cover all unexpected expenses: this should be at least 3 months income. If you could find a saving account that pays 5.875% or more before tax, then you would be better off saving your money; although your could find a mini-cash ISA that will beat your current mortgage rate as interest earned in these vehicles are tax-free.

Those rates are before tax. After tax they are less than your mortgage rate so paying off the mortgage is better than saving into those accounts. If a basic rate tax payer you need 5.49% taxable to match the mortgage rate. If higher rate, 7.32%.

You can get 5.75% (not taxable) from the Ruffler Bank ISA with a 3,000 minimum deposit or 5.2% from National Savings, much lower minimum. Either of those two is probably better than paying off the mortgage. Not by much - 40.80 a year for the 5.75% ISA.

You can get 12% before tax from Alliance and Leicester for their regular saver or 8% before tax from Lloyds TSB. See the regular saver article. If you're a basic rate tax payer either is probably batter than paying off the mortgage. You could use the regular saver until you accumulate 3000 then switch the money to the ISA.