Mortgage overpayments

[nothernexposure]

I'm after some advice! I've got a 5 year fixed rate mortgage and want to overpay if/when I've got some spare money. My question is as it's a 5 year fixed rate am I better off sticking the money in a savings account, earning some interest and paying off a lump sum at the end of the term. Or is it better to just keep chipping away at the capital over the course of the mortgage? Will be moving and downsizing at some point but hoping to hang on here for a few years at least. Any suggestions? Thanks!

It really depends on two things: 1) is your savings rate more or less than your mortgage rate? If its more then it *may be better to pit it into savings and pay when you remortgage. BUT if you, like me, would be tempted to dip into these savings, it is probably better to use it to directly pay the mortgage

You'd also need to check the T&Cs of your particular mortgage. Are you allowed to overpay ? Is that only up to a certain %? Is that only so many payments ?

Agree with pp about willpower as well.

You could try using this spreadsheet http://locostfireblade.co.uk/spreadsheet/Index.html
Enter the scenarios and then you can make the comparisons. Really useful when we couldn't make a decision. Now mortgage free - so it's worth playing around with it.

MSE has an article and one of their calculators where you can enter your current rate and savings rate. DS has used it I think.

@Plankingplanks has pretty much nailed it in the first response.

Calculator is here and is very good

Thanks everyone, I'll play around with the calculators and see what looks best. I can get a slightly better savings rate than the mortgage rate and I'm pretty disciplined with savings so confident I wouldn't touch it unless it was an absolute emergency.