Can someone help me with this maths

[WhatNow20]

I owe 148k mortgage.

Fixed interest rate of 2.35% ending in 4 years.
I came in to a bit of money and I have 60k cash right now plus another 30k in an investment fund. Plus another 20k in savings
Mortgage provider says I can over pay by 9k each year while on fixed.

Am I better off paying 9k each year until fixed term is up and then using remainder of lump sum plus investment to clear most of mortgage in 4 years

OR

do I hold on to money, wait the 4 years until fixed rate is up and then use 60k plus money from investment to pay down most of mortgage.

Or does it even matter? Is it all the same result?

It all depends what interest rate the cash will get if not paid against the mortgage.

You could put the cash in a fixed rate bond at 6% for 4 years and make more interest than you would save by putting it into your mortgage. You'd be better off doing that.

6% of 60k is £3.6k interest a year.

Interest rates are low so I'd imagine only a few hundred in interest but I'm not sure

The mortgage interest saved will be low. Don't over pay, find a good interest rate savings and pay it in once go once your term ends.

Thank you, I will do some googling on that 6%

Check moneysavingexpert for the best savings rates. Oaknorth Bank doing 5.96% for 3 yr fixed

https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

This is fab to work out if overpayments are worth it

Now savings rates are better definitely save then use it to overpay - it will be about £2000 more paid off in 4 years roughly. Use isas to make sure you don’t pay tax on the interest, you should be was to get £200 per month interest fairly easily.

If the savings rate you can get is higher than the mortgage rate (which they are) then it would make sense to not overpay until your fixed rate is over and then decide what to do, as your new rate will likely be a lot higher than the rate you pay today.

You need to remember that you will likely be liable to pay tax on savings interest assuming it is sat outside of an ISA. so factor that in to your calculations as well. Basically if you are a basic rate tax payer you can earn £1000 a year interest and if you are a higher rate tax payer you can earn £500 a year.

The NS&I 1 year growth bond is 6.2% if you can lock away your money for 12 months.

Thanks everyone, I'm not based in the UK so unfortunately I don't have access to those kinds of saving interest rates. Here it's only 1-2% tax free or around 4% and then subject to taxes

You could invest in the S&P500 & the 60k and make around 20,000 in those 4 years

I personally love overpaying my mortgage. I figure every pound overpaid makes the next pound go further. I'd overpay with nearly all my savings and then try to overpay each month.

@RandomUser987654321 You might, but you also might lose money. 4 years is not a very long horizon for investment, I think that is a risky strategy. If the market crashes after 3 years and 11 months the OP may be rather screwed. I would agree wholeheartedly if we were talking about a 10 year horizon, but 4 years...it's riskier.

OP, ultimately the answer is, if you can get a safe rate of return that is higher than the interest rate on your mortgage, when taking into account the tax you would be charged on that interest, then put the money there and overpay in 4 years, pocketing the interest as nice extra cash.

If not, then overpay now.

Either way be sure to leave yourself a good emergency fund in swiftly-accessible form.