Wwyd...pay off debts or save?

[yoikes]

So I got a letter from the bank and building society yesterday...

My ISA and savings account are now earning mothing. ISA has gone from 3% to 1% and savings is now st 0.5%.

Haven't got £££££ by mn standards :) but all in all almost £10k.

My wwyd is this:

Would you pay off the last 12 months of car loan (at 6%) and start overpaying your mortgage (2 years left on FR..)

I reckon I owe £3k on the car. We cano lh go up to 20% on thd overpayments bit wouls savw £4k in interest in 2 years.

Seems obv to me but dh is not convinced...

Save. You don’t know if you’ll need access to cash if either of you lose your jobs.

So many typos!

Pay the car off and save the rest.

pay off debt. we've hit the point where our mortgage is nearly paid off as it hasn't been worth saving so we've just done overpayments on our interest-only mortgage.

only possible issue is the T&Cs for the debts but it sounds worth it from your comment about saving £4k in 2 years.

AND worth checking if your mortgage overpayments can be taken back out if disaster strikes. It's one of the reasons we haven't actually paid off mortgage as there's quite a bit of uncertainty around our jobs over the next couple of years.

I would pay off the car and save the rest. The car is costing you 6%, which is a cost you could avoid.

Thank you x

Pay off the car and save the rest as your emergency fund. Then take what you were paying as a car payment and pay it towards your mortgage each month. That way you will be chipping away at the mortgage without missing the money!

Yes the car payment is more than the 20% overpayment :)

Think I've convinced dh!

Check for penalties if you repay early. My loan was like that. I’d still have to pay the exact same amount PLUS a penalty for repaying early! WTF

We can pay 20% over with no penalties

What @Impropriety said sounds good if you can do that without penalties re car.

Do you have an emergency fund? I'd make sure of that plus get debt paid off. Wait on overpaying mortgage.

Don't you need 6 months in savings for unexpected loss of income? A pandemic would be a good time to keep some in the bank/ savings surely?

I don't hink I'd be depleting the savings too much in the current environment, but I would stop saving anything extra, and throw it at the car debt. So, if you are putting aside £100 per month, put that to the car, not into savings.

Pay off the car. Keep the rest of the savings. Push the amount you were paying for car over to a standing order for mortgage overpayment

Does anyone make overpayments on their mortgage? We were thinking of doing it but not sure?

If you have plenty of accessable savings, yes, overpaying the mortgage can make a massive difference, FineWine.
DH and I didnt restrict spending, but generally put half of any pay rise into a mortgage overpayment. We took years off the length of the mortgage

i would pay of the debt if you lose your job you will need to cut down your outgoings asap

1. rainy day fund
2. pay off debt

10k won't go far if you lose your jobs or health. I would hang onto it.

I’d pay off the car (assuming no penalties) and keep £7k for emergencies. The money saved on the monthly car bill, I’d use to overpay the mortgage.

£7k savings would be ok for me ....if I lost my job, I’d quite easily find another because i have useful qualifications, live in a city and have no childcare worries (children are teens). Your circumstances may be different and maybe your DH is worrying that £7k is too small as a rainy day fund.

I reckon I owe £3k on the car. We cano lh go up to 20% on thd overpayments bit wouls savw £4k in interest in 2 years

You won't save £4k in interest in two years on a 6% car loan with £3k owing, if that's what you're trying to say. The interest will be more like £500 in total, probably less, £400 would be about right, is that what you meant? But with a 6% interest rate, it's definitely worth overpaying whatever you can without penalty, making sure you don't use all your easily accessible spare cash.

Whether it's worth you overpaying your mortgage depends on the relative interest rates. You can still get 1.2% in easy access accounts and many mortgage rates are below this, so it actually costs you money to do and you'd be better just putting the money in savings instead - however, this might affect benefit entitlement so possibly not worth doing.

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