Mortgage/Savings Advice

[gininteacupsandleavesonthelawn]

Looking for any views... we be been saving to ensure we have 6months of mortgage and council tax payments in case we have any problems in future (I'm pg and DP self employed) were now in a position where we have that. Are we best to leave that money in an ISA or to overpay mortgage in the hope that we could then take a 'holiday' if ever needed.

We're also getting to the point where our cash savings pot is getting to the point where it feels like we should be doing something with it... we are doing some work on house so have been dipping in but given impending baby we won't be doing much in next year. Should we be investing better? Premium bonds? Crowd funding? Overpay mortgage?

Any opinions welcome. We're very conscious of how quickly fortunes can change so want to make good decisions.

Depends on the terms of your mortgage - some mortgages don't allow payment holidays and stopping/reducing payments would ruin your credit rating.

Might be worth overpaying especially if your interest rate is more than 1 or 2%, but I would considering saving more first. You say you have 6 months council tax and mortgage payments, but you could aim for 6 months full living expenses including food, fuel and all bills.

Also, if you are having work done, it is probably cheaper to pay from savings, rather than paying off the mortgage and then reborrowing, unless you have an offset facility or similar.

Also interest rate - if you look at interest paying current accounts, you can usually get a much better interest rate than ISAs, although this is reducing at the moment.

I don't know what ISAs pay these days, but Santander 123 pay 1.5% on up to £20k (was 3% but it is dropping next week).

I'm a bit of a Dave Ramsey fan money wise and he always says this is just insurance so if you even get a penny back from the savings then great, but it's so you can get the money if need be.
Our emergency fund is in 2 bank accounts getting us £20 a month. Not great, but it's a current account we can access quickly if need be.

Will take a look thank you. I guess my question is how much is sensible to keep in 'insurance' savings and when we have enough and start overpaying mortgage.

If the purpose is a buffer in case of emergency then don't use it to overpay the mortgage unless you're absolutely certain you could then get it back in the form of a payment holiday. Many mortgages won't allow this.

6 months savings - enough to cover all essential outgoings for this period.

Have you considered an offset mortgage? The savings will reduce the mortgage interest and you should save more on that than you would earn in interest on savings . We have one and it's very flexible.

We fixed for 5y last year so couldn't change to offset until after that. Will definitely consider though.

We decided to have enough savings to keep us going for 6 months (incl all bills, food + a bit extra). Otherwise, I think that it depends on personal attitude and preferences. In the past, we used to invest surplus money whereas going forward we will probably look at paying down the mortgage. You might also look at planning your finances for when the baby arrives, your retirement provision etc. It might be worth meeting with an IFA to come up with a plan.

We already have 1Dd so comfortable with retirement provisions and insurances etc as well as wills. May review with IfA once im back to work though, good idea