This is a dire financial situation isn’t it?

[Whataballsupp]

I’m recently a single parent. I own the home we were both in and now I’m obviously paying everything for it, mortgage and bills around 1,400 a month. The mortgage I owe is 290k, I’m 36 and it’s still got 36 years left to run on it.

At the moment I have a spare 1k a month. I am trying to save this as I am now a single parent and who knows what is going to happen. But I’ve just looked on an overpayment calculator and if I overpaid mortgage by 500 a month for example, it takes around 20 years off the mortgage. Even making that overpayment for a year would cut down a few years I have to pay it off.

Should I be saving or overpaying? I am panicking as it’s just me and I have only 5k savings overall at the moment. Don’t know what to do.

Pay 200 extra per month towards the principal and save the rest. This way you are paying down and also saving more money. Once you get 6 months of living expenses worth in savings, you can up the extra payments to $500. Then, when you have a years' worth of expenses saved, then up it a little more if you want. Or start investing. If you have the means, you should keep easily liquidated money available for emergencies.

If it's a regular repayment mortgage with no early redemption penalties then overpay as much as you can each month. It's amazing how much it cuts the repayment period.

If the mortgage interest rate is higher than your savings rate then overpay.

Check out Dave Ramsey. He gives some great financial advice and tells you in what order you should be prioritising your finances in order to become debt free.

Next time your mortgage is up for renewal, speak to your adviser about an offset mortgage

Could you look into an offset mortgage to save some interest? We have one of those . The "savings" are still available if we need them but offset the interest bill. This also means our normal monthly payment counts as a small overpayment

Second @Mumof3confused and @Zebrasinpyjamas an offset will help and you can still access your savings. They aren’t completely locked in but are still saving you money.

I would build up savings to be honest. I’d be more worried about cash flow than paying off mortgage. Id build up savings until you have at least 6 months living costs, and then an emergency fund for new boiler / car etc. then I’d start over paying mortgage

This

It depends on what your interest rate is (is it lower or higher of what a high interest rate account would give you? And what's the term of your mortgage (2,5,10 years). Also , are you restricted in anyway to overpay? ( My old mortgage had a restriction of 10% overpayments). In this case you'd just save in a high interest account then pay a chunk when the term comes to an end.

Overpay. Your mortgage interest rate is gonna be well higher than whatever you get in savings…

Moneybox have launched a Super saver today at 5% with interest paid monthly and one monthly withdrawal requiring 24 hour notices. I'd be putting it in that then I could take it out easily and overpay when the mortgage was up for renewal.

I have a nationwide account that pays 8% interest on up to £200 a month. It can't be the only savings account that high