Overpay Your Mortgage or Save the Money?

It was good to read recently many people are taking advantage of low interest rates and overpaying on their mortgage. By paying what you can afford or what you were paying when the interest rates were around 6% you could save thousands in interest payments reducing your overall term by years for some, of course it depends on how much you overpay and your current interest rate for your mortgage.

There may be now a better way to save you even more money and shave even more of your mortgage term. Savings rates have shot up recently and it is now possible to find savings accounts that offer 5% per cent interest. The top paying accounts are fixed term bonds where the money would be locked away from two to five years. If this money is specifically for your mortgage then it shouldn’t be a problem for it to be locked away, budget properly and save what you can afford.

Those that can benefit the most are those who are on low interest rate tracker mortgages or are fixed in for the long term. If you can find a savings account that offers net interest at a higher rate than your mortgage then it would be more beneficial for you pay into the savings account rather than overpaying your mortgage.

If you took out one of the great tracker rate mortgages in 2007 you will now be enjoying ultra low rates so you can certainly benefit however new customers looking at tracker mortgages will find the rates will be higher than savings account offerings. If you are in this situation go for overpaying if you can afford it, the house will be yours that much sooner.

Wherever you have your home whether it is a derby or Dundee mortgageyou could be in the situation where you can save more by putting the money in a savings account. If you are unsure what is best for yourself I would recommend seeking professional advice so you are happy before going ahead so there are no surprises later.