Whats best -Save higher deposit or pay overpayments on mortgage?????

80
Found 5th Sep 2011
Good Morning All,

Id just like to know what is the best thing to do........

Im currently saving up as we wish to move house - i already have a some saved up to use a deposit, which will cover the 10% required.
Im making £100 overpayments on my current mortgage to reduce the value and hopefully give us a better equity ratio (even tho house prices are falling).

My question is - does it make any difference as to if i should either
A) Any money i do save to continue to put into my savings account and save a higher deposit amount or
B) Stop saving further monies now that i have got the 10% deposit amount required and start make HIGHER overpayments on my current mortgage????????
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80 Comments
I think if you can get a bigger % deposit then there are more mortgages to choose from (and maybe better rates).

So I would go for A).

But if the next level that makes a difference is say 30% and that would take 2 years to save to reach, then I would go for B).
can i ask something please.

if ive got £100,000 in savings,or atleast thats the amount i would have to put down on a deposit, what kind of mortgage/amount would i be able to get?



EN1GMA

can i ask something please.if ive got £100,000 in savings,or atleast … can i ask something please.if ive got £100,000 in savings,or atleast thats the amount i would have to put down on a deposit, what kind of mortgage/amount would i be able to get?



Depends on your income level.
OP, depends what the mortgage rate on your mortgage is.
Save up all the extra money each month, at the end of the year put it all on black!

Dude your susposed to open a new thread for your own questions!!!!.....

EN1GMA

can i ask something please.if ive got £100,000 in savings,or atleast … can i ask something please.if ive got £100,000 in savings,or atleast thats the amount i would have to put down on a deposit, what kind of mortgage/amount would i be able to get?


EN1GMA

can i ask something please.if ive got £100,000 in savings,or atleast … can i ask something please.if ive got £100,000 in savings,or atleast thats the amount i would have to put down on a deposit, what kind of mortgage/amount would i be able to get?



Maybe times your family annual income by 3 then add £100k.
master_chief

Save up all the extra money each month, at the end of the year put it all … Save up all the extra money each month, at the end of the year put it all on black!



What a ridiculous thing to advise!
















Red, surely?
Obviously if your mortgage rate is lower than the interest rate you can get on savings it makes sense to keep saving rather than lowering your mortgage. I personally would not be paying off the mortgage as once it is on there you cannot claw it back out if needed, also have you checked that it is ok to be paying all the extra off mortgage without being penalised
JonnyTwoToes

What a ridiculous thing to advise!Red, surely?



You do red, I'll do black. One of us will be very happy
master_chief

You do red, I'll do black. One of us will be very happy



Unless it's green of course

Edited by: "JonnyTwoToes" 5th Sep 2011

Im on Nationwide SVR............so you can make as much overpayments as you want, which is awesome whilst these interest rates are low and i can afford to.

secretwoman123

Obviously if your mortgage rate is lower than the interest rate you can … Obviously if your mortgage rate is lower than the interest rate you can get on savings it makes sense to keep saving rather than lowering your mortgage. I personally would not be paying off the mortgage as once it is on there you cannot claw it back out if needed, also have you checked that it is ok to be paying all the extra off mortgage without being penalised


so what is your interest rate on your mortgage?
We'll play the version that doesn't have 0.

Sort your quoting out JTT, seen a few of your posts messed up now.

My question is - does it make any difference as to if i should eitherA) … My question is - does it make any difference as to if i should eitherA) Any money i do save to continue to put into my savings account and save a higher deposit amount orB) Stop saving further monies now that i have got the 10% deposit amount required and start make HIGHER overpayments on my current mortgage????????



Not a single person on the planet can give you a correct answer based on the information you have provided.
I advise you go see a financial advisor.
Edited by: "thesaint" 5th Sep 2011
I would love to be mortgage free.

Good luck op.
master_chief

We'll play the version that doesn't have 0.Sort your quoting out JTT, … We'll play the version that doesn't have 0.Sort your quoting out JTT, seen a few of your posts messed up now.



That's what man flu will do for ya! But I'll get by...... one day at a time.
nick1981

Im on Nationwide SVR............so you can make as much overpayments as … Im on Nationwide SVR............so you can make as much overpayments as you want, which is awesome whilst these interest rates are low and i can afford to.



Whilst the interest rates are low, the benefit of overpayments is vastly diminished.

Edited by: "thesaint" 5th Sep 2011
OP your deposit will not be made up
Solely of your savings, it will include your equity also. And budget for fees etc too.
thesaint

Not a single person on the planet can give you a correct answer based on … Not a single person on the planet can give you a correct answer based on the information you have provided.I advise you go see a financial advisor.



Why?

If current interest rate on mortgage is less than what he will get in savings, then save.

If current interest rate on mortgage is higher than what he will get in savings, then repay mortgage*

* Unless tax breaks suggest a higher interest payment on mortgage is beneficial - you will have two homes right?

At the end of the day, it's what you are happier with on a month by month basis.
JonnyTwoToes

Why?If current interest rate on mortgage is less than what he will get … Why?If current interest rate on mortgage is less than what he will get in savings, then save. If current interest rate on mortgage is higher than what he will get in savings, then repay mortgage** Unless tax breaks suggest a higher interest payment on mortgage is beneficial - you will have two homes right?At the end of the day, it's what you are happier with on a month by month basis.



So it's only the interest rate that can be a factor(disregarding tax breaks)?
secretwoman123

Obviously if your mortgage rate is lower than the interest rate you can … Obviously if your mortgage rate is lower than the interest rate you can get on savings it makes sense to keep saving rather than lowering your mortgage. I personally would not be paying off the mortgage as once it is on there you cannot claw it back out if needed, also have you checked that it is ok to be paying all the extra off mortgage without being penalised



Given how crap most savings interest rates are at the moment (don't forget to factor in tax on interest), thats not all that likely to be the case (especially on an account where the money can be withdrawn at will). That said, 10% is a fairly small deposit and will typically add at least 1% interest over 20-25% deposits and 2% over 40% so increasing the amount saved for a deposit may be the best option...
thesaint

So it's only the interest rate that can be a factor(disregarding tax … So it's only the interest rate that can be a factor(disregarding tax breaks)?



Current interest rates, tax breaks, personal situation in terms of length of mortgage loan and other common sense indicators yes. Unless you have a better calculation of course?
jah128

Given how crap most savings interest rates are at the moment (don't … Given how crap most savings interest rates are at the moment (don't forget to factor in tax on interest), thats not all that likely to be the case (especially on an account where the money can be withdrawn at will). That said, 10% is a fairly small deposit and will typically add at least 1% interest over 20-25% deposits and 2% over 40% so increasing the amount saved for a deposit may be the best option...



Depends what the mortgage interest is though - mine is 0.3% above base for instance.
JonnyTwoToes

Current interest rates, tax breaks, personal situation in terms of length … Current interest rates, tax breaks, personal situation in terms of length of mortgage loan and other common sense indicators yes. Unless you have a better calculation of course?



So contrary to what has been said, you don't just pay off the mortgage if it has a higher interest rate than what the savings give, or vice versa.
thesaint

So contrary to what has been said, you don't just pay off the mortgage if … So contrary to what has been said, you don't just pay off the mortgage if it has a higher interest rate than what the savings give, or vice versa.



X) Setting me a trap? I think I've made it clear enough.
JonnyTwoToes

Depends what the mortgage interest is though - mine is 0.3% above base … Depends what the mortgage interest is though - mine is 0.3% above base for instance.



And if you got that rate on a 10% deposit count yourself very lucky indeed! I'd imagine the cut-off as around 3% where its better to overpay than save.
Edited by: "jah128" 5th Sep 2011
JonnyTwoToes

X) Setting me a trap? I think I've made it clear enough.



I never asked a question, it was a statement.
I advised the OP to see a financial advisor, which is the best information provided in the thread.

Edited by: "thesaint" 5th Sep 2011
thesaint

I never asked a question, it was a statement.I advised the OP to see a … I never asked a question, it was a statement.I advised the OP to see a financial advisor, which is the best information provided in the thread.



I disagree - why would you spend money on an IFA when this is nothing more than common sense?
easy answer

put in a deposit account unless mortgage rate is higher
thesaint

So it's only the interest rate that can be a factor(disregarding tax … So it's only the interest rate that can be a factor(disregarding tax breaks)?


of course! oO
csiman

easy answerput in a deposit account unless mortgage rate is higher



Oh dear
JonnyTwoToes

I disagree - why would you spend money on an IFA when this is nothing … I disagree - why would you spend money on an IFA when this is nothing more than common sense?


Spot on!

The free charging ones will only be out for their best interests (despite 'best advice' regulations)

They will only say the obvious if truly giving best advice (see 2 posts up )
thesaint

Oh dear


more trolling I see. You contradict yet provide no better answer (as per usual)

quite pathetic really!
DLM

http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings


and the conclusion there is:-

So based on maths, if your mortgage rate’s higher than the after-tax savings interest, don’t save, overpay the mortgage

/end

its not rocket science (unless you're got an amoeba brain like the stain)
csiman

more trolling I see. You contradict yet provide no better answer (as per … more trolling I see. You contradict yet provide no better answer (as per usual)quite pathetic really!



I will add this then:

1. My mortgage rate is 3.49%
2. My savings rate is 3.50%.

Should I pay extra on the mortgage, or save in the savings account.

You really should keep quiet and let everyone think you are a fool, instead of typing and removing all doubt.

Edited by: "thesaint" 5th Sep 2011
thesaint

I will add this then:1. My mortgage rate is 3.49%2. My savings rate is … I will add this then:1. My mortgage rate is 3.49%2. My savings rate is 3.50%.Should I pay extra on the mortgage, or save in the savings account.You really should keep quiet and let everyone think you are a fool, instead of typing and removing all doubt.



I didn't say that..... I think you've quoted the wrong person X)

Although I agree with CSI 100% X)
thesaint

I will add this then:1. My mortgage rate is 3.49%2. My savings rate is … I will add this then:1. My mortgage rate is 3.49%2. My savings rate is 3.50%.Should I pay extra on the mortgage, or save in the savings account.You really should keep quiet and let everyone think you are a fool, instead of typing and removing all doubt.



How did you mess this quoting up??
thesaint

I will add this then:1. My mortgage rate is 3.49%2. My savings rate is … I will add this then:1. My mortgage rate is 3.49%2. My savings rate is 3.50%.Should I pay extra on the mortgage, or save in the savings account.You really should keep quiet and let everyone think you are a fool, instead of typing and removing all doubt.


now you're just being a pedantic troll

receiving 0.01% of any amount is better than paying it

are you that stupid?

any constructive argument against the obvious answer (rhetorical question btw as I expect the usual crap in reply)
Edited by: "csiman" 5th Sep 2011
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