Invest £5k or reduce mortgage??

[Preggersntired]

Just wondering whether we should invest put DCs £ in overpaying the mortgage ... Or continue to keep it in rubbish interest rated accounts that I have to keep changing annually due to strict T&Cs on top interest-earning accounts?? Has anyone saved liked this for their children?

We save about £100/month for them & hope up until they're 21 or so. Only issue I can see is that there is no £ with their name on it ... So to speak. But is this really a problem, so long as best value is achieved...?

I don't know how much we would end up giving them but we would probably be quite generous...

Btw we have a separate life assurance policy for them to cover paying off mortgage/ something substantial towards uni fees etc.

Mortgage is £380k, 2.85% interest, 23 years & kids are 4mo & 3yrs.

[Preggersntired]

Also.. We have almost £5k so far... & could pay off mortgage without penalty.

[AdventuresWithVoles]

I would pay down the mortgage as fast as possible. You will never regret it.

[CogitoErgoSometimes]

I think, when it comes to saving, you have to hedge your bets to get the most out of it. The money I have spare each month for DS goes partly into a Junior ISA & partly into a children's unit trust. Gifts from relatives go into his savings account and, every so often, I convert a lump sum into a longer-term bond with a better rate. I'd rather these were in his name than mine so that I can still get my tax-free ISA limit in full.

Overpaying a mortgage means you can pay it off quicker, which is never a bad thing. My plan is to have mine paid off by the time DS is 15 or 16. The only downside is that all your capital is tied up in a property and that would make it difficult to access if you need it early for something like college fees.

[Preggersntired]

Hmm I guess I could make a note in the diary to take out the capital required prior to it being needed... Ie the nearest remortgage to eldest DC requiring the £...

[CackleMeIAmYours]

Have you thought about an offset mortgage? You can keep the money in the account so you won't be paying interest on that portion of the mortgage, but you will be able to access it if you need to. Best of both worlds really.

Also, if you have an offset mortgage, you can have your wages paid into it and then leave them there for the whole of the month.

Put your day-to-day expenses on a credit card and pay it down at the end of the month.

That way, you won't be paying interest on the mortgage to the amount of your monthly income.

It really adds up over the term of the mortgage.

Well worth getting some advice from a mortgage broker on this though, my FSA authorisation is not current, so please don't take my post as 'advice' as such.

[LadyLapsang]

I think it depends on how much money you and your DH / DP are each saving in your own name. I think you need to look after your own future first. I would pay in the yearly ISA limit and have an offset mortgage if there was enough extra money around to make it worthwhile. When the children are older you can still pay their university fees etc. If you are very wealthy or expecting a large inheritance then I would be more inclined to put money in their name straight away.