Save It Vs Whack It Off The Mortgage?

[BibiThree]

Help! Since I've been on maternity leave I've saved as much as I can from my wages so we've got £4,000. The plan was to keep that as emergency money because I wasn't going to go back to work. It's looking more and more likely now that I will have to return to work (part time) so...

do we keep it in savings for a rainy day or would it work better for us if we got it off our mortgage (£85,000)?

Thanks!

do you have any savings?

if not I'd stick it in a cash isa (or 2)

it's in a savings account at the mo. no other savings except the kids piggy banks

whack most of it off mortgage and save some
can you pay off some of the mortgage without penalty? make sure first

what is the interest rate you are paying on your mortgage?
Say it is 5% -- can you invest the money somewhere that will make more than that (yes, there are 6% savings accounts somewhere - i've seen).....
so theoretically, should be better off putting it in savings

Depends on your mortgage rate vs the savings rate. Usually the mortgage rate is higher so you save more by repaying the mortgage but you might be on a lower fixed rate atm. Also soemtimes there are penalties for paying off chunks early.

I think the other thing to think about is that it's good to have a pot of cash to fall back on in case the boiler blows up or whatever. If the mortgage rate and savings rate are pretty similar, I'd be inclined to keep it in savings.

Keep it as savings

My roof leaked last year and cost 3k to repair

Save it for that sort of eventuality

i think first direct has an e-account with 5.5 pc

but then if interest rates go up you might want to keep it quite liquid to bring down the mortgage in future

thanks guys! I think the savings rate is just above our mortgage rate at the mo, so will leave it where it is for now.

Our boiler already blew up 2 years ago, so that's one disaster off the list!

Remember to calculate the interest AFTER tax!

NO DO NOT LEAVE IT WHERE IT IS

Put in a cash ISA please .. it's a savings account but you don't pay tax on it .. and you can access it as easily as in a bank

find the best paying one at the moment and whack it in .. I think you'll have to take 2 out (one each adult)

looking at MartinLewis site icesave is the top one at the moment .. 6.1% (TAX FREE) .

Martin Lewis MoneySavingExpert on ISAs here

Thank you - I opened an ISA last year (not much in it) so can't open another yet - and you can't pay into more than 1 in each tax year can you?

Will get dh to open one.

you can top up your existing ISA to the 3K mark .. or you can wait till April and take out the best performing one then

Some (but not all) ISAs will let you transfer in money from a previous ISA too. You have to do this carefully though, and make sure that you follow all their rules for an ISA transfer, otherwise the money will be counted against the year's allowance.

Another vote here for savings, by the way. It's always a good idea to have a buffer against all that life can throw at you.