Lump sum towards the mortgage or keep as savings?

[teatimewinetime]

Me and my DH have quite a hefty mortgage which is manageable on both of our salaries. We’ve been discussing TTC this year and if we’re lucky and fall pregnant then obviously my income would be reduced significantly. We have reasonably healthy savings and are wondering what would be best to do with them. Pay a lump sum towards the mortgage (max we can do in a year) to help reduce it down or keep it as savings for if/when I would be off with a LO.

Any wise MNers got any advice?

DH was left some money a couple of years ago and decided to pay a lump sum on the mortgage. Our reasoning was that it would reduce our mortgage payments and the interest that it would earn was far better than a if we kept it all in a savings account. We did keep some in an ISA though, as a contingency fund.

Depending on how much you have, I'd put some in an ISA so that it's readily accessible (baby stuff, rainy day fund etc) and some towards the mortgage.

HTH and good luck TTC

Are your 'reasonably healthy savings' likely to cover any drop in income when you are on maternity leave and childcare costs afterwards?

What's your mortgage rate? Plenty of people have a low mortgage rate that is easily beaten by savings rates (ours is 1.1%) so it's actually better to put the money into a savings account than using it to pay off your mortgage. If you're worried about frittering it away, you could always look for a fixed term product so you can't spend it. These tend to have better interest rates anyway.

I'd keep cash at hand at the moment whilst we ride through brexit.

Once dust has settled have another look.

We don't know what's going to happen with anything. I'm sure it will all be fine in a few years but I wouldn't want money tied up inaccessible.

Or look at switching to an offset mortgage which means you can keep your savings and reduce your monthly payment (as one option) or the term(as another).