Had a thing through the door from my bank about over paying my mortgage.

I don’t owe any money on credit cards or car loans or anything.

I have 3grand in savings, but the interest is peanuts, so I was thinking of paying an extra £250 a month off my mortage instead of saving it. Going off the calculator for the schemee I’ll save myself £16 grand and about 2 years of payments over the life of the mortagage (16.5 years left).

I can stop the overpayments at any time and it’s free to do so. I’ll still be saving £250 or so a month and have plenty of cash for my needs.

I’ve been prudent in the boom years and I’m in a healthy situation right now I know, I just don’t know what my next move should be.

Yes, yes, yes.

Even a £50 overpayment can knock a significant amount of time from a mortgage.

Your savings are making bugger all at the minute and the best place for it is to reduce the interest on your mortgage.

Conks

yes, if you can.

Also worth checking the small print in that if you ever need it, you can effectively have that cash back as a payment holiday – I know you can with mine.

Definately!!!! I’ve been doing it for about 3-4 years. Not by that much, but over the term of the mortgage I reckon it’ll save over 20 grand in interest payments

heh – has to be a record for stw, the first 3 responses all saying the same.

I’ll pop to the bank this morning then and get it sorted, will be interesting to see if I can get the overpayments back out if I need to, but thats not a priority for me tbh.

If I need more than 3 grand (or whatever I’ll have saved up) in a hurry something has gone seriously wrong.

If I need more than 3 grand (or whatever I’ll have saved up) in a hurry something has gone seriously wrong.

It might have gone seriously right of course. I always like to have a small reserve of readily accessible savings so that, if a gorgeous 19 year old nymphomaniac wants to run away to Sao Paolo with me for a month of torrid, theatrical, animalistic sex and raging drug abuse I don’t have to refuse due to shortage of funds….

Find out when any overpayments kick in. I seem to remember certain banks only knock it off the bill once a year (I might be mistaken), so you may worth saving it and getting a small amount of interest, then every December maybe paying a big lump sum off.

Obviously you can’t just get your money once it’s in your mortgage so be sure you’ll not need anything in the future – new car, new kitchen etc.

In this current climate I’d be tempted to have more than £3k savings for a rainy day before I looked at big overpayments.

Absolutely, always pay off debts first before putting into savings but remember to keep some money aside for a rainy day. A depressing thought but how long would your 3 grand go if you lost your job?

I’m still saving £250 a month and overpaying by £250, I have insurance to cover me for 12months if I lose my job, this time next year I’ll have over 5 grand saved and I have the option to take a mortgage holiday for up to a year.

The company I work for has posted double digit profit growth for the last 4 years and are rated as the 2nd best company looking ahead by the industry. The site has seen 50mill investment in the last 3 years and have just bought land to expand and invest another 25mill.

If I do lose my job, the wife can afford the mortgage on her own (just).

Like I said, I’ve been prudent in the boom years, I just wasn’t sure of my next step.

Whilst the nympho sounds good, I think the missus would have a few words with me…

If you check out Virgin money they have a one account where your savings offset your mortgage payments. they also have an online calculator that you can try different amounts and timescales in.Also I do not think you have to actually pay the money to the mortgage you just leave it in the account.

Not based in the UK, so the virgin account is no use to me, only one here that is similar is ran by a bank in trouble, but thanks.

Oh… and look at ‘proper’ flexible mortgages. They’re great. You ahve to pay a bit in fees, but its well well worth it

I put all my money for upcoming business tax and VAT bill in my mortgage account, reducing the interest further. I’ve taken 3 years off the mortgage already

I overpay my mortgage as much as I can – I was amazed at how many years off the 25-year period you get for even a modest overpayment.

I can also take payment holidays if needed, so if I need emergency cash, I can elect not to pay the mortgage for a month or two, as my overpayments means I have a surplus I can tap into. Seeems to make more sense than keeping it in a savings account.

Well I’m going to disagree with you all!

I have an Offset Mortgage at 0.49% above base rate so that’s pretty. I am going to put a lump sum into my cash ISA for this year and next when I can as I can get a rate better than my mortgage. If that changes then I can get it out whenever I like; BTE, I already have as much invested in the stock market as I want for the time being.

Thanks to a combination of an ever-plummeting base rate and a tracker/offset mortgage with payments calculated once a year, I’m currently overpaying my mortgage by a factor of 3. Plus I have a chunk paid into the linked current account to cover DD’s so that offsets against the mortgage before the DDs are paid, plus my meagre savings are offset against it too.

Ker-quite literally-ching.

lol @ Big Dummy

I have an Offset Mortgage at 0.49% above base rate so that’s pretty. I am going to put a lump sum into my cash ISA for this year and next when I can as I can get a rate better than my mortgage.

A great deal, but I suspect it’s no longer on the market. If you’re paying a standard variable rate or similar then it’s going to make sense to pay off the mortgage. (Bearing in mind need to have access to some rainy day money).

So the OP should compare the interest rate that he’s currently paying with ISA rates – there’s 3.51% at Natwest.

Definitely do it – it’s not going to make much investing in any other system at the moment, and a small monthly payment can save thousands longer term