We could overpay our mortgages by £500 a month, but we wonder whether saving the money might be preferableQ My wife and I have two mortgages with our lender and we reckon we can afford to overpay them by up to £500 a month. The larger mortgage is on a fixed rate of 5%; the smaller one, a top up to buy our second home, has a much lower tracker rate. Is it a good idea to overpay rather than saving the £500 a month? If it is, which mortgage is financially best to overpay first? MHA Whether overpaying your mortgage(s) is a good idea depends a lot on the shape of the rest of your finances. If you are running a debt on a credit card, for example, or are repaying a personal loan, clearing these would make more sense than overpaying on your mortgage because credit cards and personal loans tend to have higher rates of interest than mortgages. Even if you don’t have other debts, a better use of your spare cash might be to build up a financial cushion – of an amount equivalent to three to six months’ income – to fall back on in emergencies. Continue reading…
Source : theguardian.com
Read more…Is overpaying a mortgage preferable to saving?
