Property News · October 16, 2023

We have £10,000 left after a house move – should we save it or overpay the mortgage?


I think overpaying our loan won’t affect our monthly repayment as we’re on a two-year trackerQ After a recent house move we have about £10,000 in savings left over. We’re now on a two-year tracker mortgage while we navigate the uncertain economic times and rates.My question is: would it be best to put the savings we have into a one-year fixed-rate account and benefit from an interest rate of 6%, or just put the cash towards overpaying the mortgage?By saving it we’ll make money from the interest and then after a year can overpay into the mortgage with the added interest we’ve made. Because, as I understand it, overpaying that money into the mortgage now won’t affect our monthly repayment given we’re on this two-year tracker rate? Or have I misunderstood?JEA Unfortunately, your understanding is slightly skew-whiff. Overpaying your mortgage will have an impact on your monthly mortgage repayment (which will be immediate if you are charged interest daily, but take slightly longer if interest is calculated monthly as with mortgages from a handful of building societies). This is because overpaying reduces the amount you owe your lender, which in turn, reduces the amount of interest you pay which in turn reduces your monthly repayment. Continue reading…

Source : theguardian.com
Read more…We have £10,000 left after a house move – should we save it or overpay the mortgage?

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