Overpay, offset or regular savings?

Hi all,

My mortgage is 5% I can offset savings or overpay this (totally flexible)

OR

A building society with 8% gross for a year (6.4% ish). Interest paid at end of year then close account

Would I be better using my 3k (£250 mth) for the year in the building society or paying into the mortgage account reducing interest I pay on the mortgage (and building up savings there).

Thanks

JD

Comments

  • Joe_Bloggs
    Joe_Bloggs Posts: 4,535 Forumite
    Don't overstretch yourself with your investments. Build up a significant offset savings buffer say £3K plus and then ask yourself can I get a better return with future payments into this account or try elsewhere ?
    Those 8% gross regular saver accounts only pay 8% on the first payment. There are only 11 months on interest available on the second payment etc. And you get hit by tax on the interest according to earnings. If you miss a payment you often get transfered to an acccount with less interest. If you had a savings buffer you could keep the payments up regardless of individual temporary circumstances.

    A slow stooze (utilising a 0% purchase card on essential spending) could be an alternative to feed a regular saver. This also requires a savings buffer in my view, as you may have to use the buffer to pay of the card before the savings from the regular savings are available.
    J_B.
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