Mortgage overpayment/Saving compromise

[tp1876]

Hi there,

Hopefully you financially astute people can give me your thoughts on what i'm best off doing in the following situation!:

I currently own a flat and i'm also saving to buy a house with my partner in 3/4 years. My plan is to keep my flat and let it out once I've bought a house with my partner.

At the moment I have £900 p/m 'spare' money once all fixed monthly outgoings/living expenses have been paid. What proportion of this should I save towards a house deposit, and what proportion should I use to overpay my existing mortgage?

Additional info:

Current mortgage on flat: £480 p/m 25 year mortgage, 2 year tracker 2.69% + br, 24 years left, £500 p/m overpayment limit.
Approximate target house budget: £300k
Partner saving £500 p/m towards house deposit

Sorry for the rambling first post, any thoughts appreciated!

[Sir Bagalot]

So mortgage is currently 3.19%

First Direct and HSBC currently have regular savings account paying 8% with a max of £300pm.

Pay additional £499.99 off mortgage a month but only if you can get back later.

[gangzoom]

If your definatly going to rent the flat out save for a deposit. If you can save £1400/m for 3-4 years your be able to put down nearly a 20% deposit which give you access to decent rates for mortagages. Paying off the flat early will make no difference to you if rent from tenants will cover the mortagage.

[pistol pete]

Interest on a rental property is tax deductible.
Once you have the house, you want as much of your total interest repayment on the flat, so at the moment it depends if you plan to remortgage the flat path a b2l (in which case it doesn't matter) or get a consent to let from your current lender (in which case you won't want to overpay at all).