Overpay mortgage or national savings?
Discussion
davepoth said:
Which has the higher interest rate? Put it in that.
I thought with low intrest rate on mortgage -less is being paid as intrest and more on repayment - so better to pay off mortgage ?-or have i got it wrong - should i overpay when mortgage intrest rates are sky high instead ?
Personally I see the mortgage as the biggest stone around your neck your ever going to have, id be paying off that ASAP, think of the free cash in your back pocket once its gone then you can worry about where to invest! Nobody knows whats going to happen to interest rates over the next 5 years but they ain't going to go down your mortgage is only ever going to get more expensive.
Mr POD said:
A simple excel spreadsheet should be all you need to work it out.
....so long as you know what RPI and what mortgage interest rates will be for the next 5 years! I suppose it depends on your circumstances, apart from predicting RPI & interest rates, ask yourself not the Harry Callahan one (d'ya feel lucky?) but three questions; Your tax bracket? How likely are you to need all your money in the next 5 years? Does your mortgage provider allow irregular lump sum capital repayments?
The tax-free element of NS&I are what make them extra-attractive for higher rate taxpayers, with a current return equivalent to about 9% for a 40% taxpayer dropping to about 5% for a non-taxpayer.
Should interest rates soar and RPI plummet you can cash in the NS&I certificates with a few days notice and put it against the mortgage. You lose all interest in the first year, and then decreasing amounts of the 0.5% over RPI as you approach the 5 year term.
BoRED S2upid said:
Personally I see the mortgage as the biggest stone around your neck your ever going to have, id be paying off that ASAP, think of the free cash in your back pocket once its gone then you can worry about where to invest! Nobody knows whats going to happen to interest rates over the next 5 years but they ain't going to go down your mortgage is only ever going to get more expensive.
This seems to be my line if thinkingShould have mentioned i already have a previous issue 5 years Rpi .I applied for new recent issue but there was missing details -so form returned and chaeque not banked -which got me thinking of mortgage instead
tali1 said:
This seems to be my line if thinking
Should have mentioned i already have a previous issue 5 years Rpi .I applied for new recent issue but there was missing details -so form returned and chaeque not banked -which got me thinking of mortgage instead
You can buy them online. If you've the same address as you had when you bought the last lot, and your customer number (on your certificate) you can buy using your debit card.Should have mentioned i already have a previous issue 5 years Rpi .I applied for new recent issue but there was missing details -so form returned and chaeque not banked -which got me thinking of mortgage instead
tali1 said:
BoRED S2upid said:
Personally I see the mortgage as the biggest stone around your neck your ever going to have, id be paying off that ASAP, think of the free cash in your back pocket once its gone then you can worry about where to invest! Nobody knows whats going to happen to interest rates over the next 5 years but they ain't going to go down your mortgage is only ever going to get more expensive.
This seems to be my line if thinkingShould have mentioned i already have a previous issue 5 years Rpi .I applied for new recent issue but there was missing details -so form returned and chaeque not banked -which got me thinking of mortgage instead
With interest rates as low as they are, then there is no real meaningfull reason to save.
Just get rid of that big stone around your neck.
The diffencebetween the cash you end up with through the interest, minus the governments cut, is next to nowt.
Getting the mort. paid would be my top priority.
V.
tali1 said:
I thought with low intrest rate on mortgage -less is being paid as intrest and more on repayment - so better to pay off mortgage ?
-or have i got it wrong - should i overpay when mortgage intrest rates are sky high instead ?
It's all about the differential. If the loan rate is higher than the savings rate (it almost always is) put the money into the loan. In the rare occurrence when the savings rate is above the loan rate, it makes sense to save the money, either to pay the loan off in one go when you can, or put the money into the loan if the differential swaps round. -or have i got it wrong - should i overpay when mortgage intrest rates are sky high instead ?
davepoth said:
tali1 said:
I thought with low intrest rate on mortgage -less is being paid as intrest and more on repayment - so better to pay off mortgage ?
-or have i got it wrong - should i overpay when mortgage intrest rates are sky high instead ?
It's all about the differential. If the loan rate is higher than the savings rate (it almost always is) put the money into the loan. In the rare occurrence when the savings rate is above the loan rate, it makes sense to save the money, either to pay the loan off in one go when you can, or put the money into the loan if the differential swaps round. -or have i got it wrong - should i overpay when mortgage intrest rates are sky high instead ?
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