Savings versus overpayment (within fixed time span)

[Combusting]

A done to death topic here BUT -

1. We need the equity in spring 2026. In other words we are to move house in spring 2026 to upsize.
2. current balance 410k. Interest rate 2.7% fixed till spring 2026.
3. Monthly overpayment ability: £1450 overpayments per month for the next year and then £1850 per month for the next 1.5 years till spring 2026.
4. can currently access cash ISA with 5% interest that allows trickle in of money monthly

Given these parameters am I right to calculate that saving that sum of £1450 x 12 + £1850 x 18 in a CASH ISA of 5% and then chucking the lot at the mortgage in spring 2026 yields 13k more in our favour than putting these into overpayments?

Hmm I may have miscalculated. It’s possibly onlyleaving us 2k better off in that short 2 years 6 months Timeframe

You'll be better off putting g it into a high rate savings account

If you can lock money in you can get as high as 6.2%

As a general principle yes.

for the 2.5 year time span though this difference is only £2k from what I see?

”Locking money away” isn’t the position. As my OP says it needs to be an ISA which allows me (as a higher rate tax payer) to trickle in the overpayment sums monthly.

This in the 2.5 year frame is only leaving us 2k better off.

this is what I am trying to confirm…

I dont think the 13k of interest is right!
But the savings account route will net you more money.

Roughly, you will have in the first year:
Month 1: 1450 at 5% = £6 interet
Month 12 (1450x12) at 5 % interest = £72.50 interest.
Over the year, 435 interest.

There are quite a few low figure savings accounts (i.e up to 5 or 10k) which allow unlimited withdrawals and pay more than 5%. Barclays rainy day saver or YBS. As a higher rate tax payer you can earn £500 in interest before tax kicks in.

There's a psychological element to overpaying as well as the financial benefits. You could earn slightly more locking it away but in terms of getting used to the larger mortgage, seeing it as part of the mortgage payment can be useful. Though less so if you are already financially disciplined. For many people it's easier to have a treat and not save than it is to cut a mortgage payment which you just start to see as the default.

I'd probably do a mix. Overpay some within the limits you are allowed and save the rest as a lump sum. It probably makes a lot less difference on such a big mortgage but I have a few accounts up to the 5k limit (the rate drops below this) so I syphon off the £25 I earn on each of them and then pay the extra £75 off the mortgage (but the part I'm trying to clear is a low figure).

At your figures though this wouldn't be much of a dent but it's money I have earned without doing anything that provides no additional benefit to interest above the set limits.

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

Yes. Super familiar with this :) the query is about the 2.5 year time span rather than comparing savings versus overpayments in the long run.

Thanks. Superbly financially disciplined. However so far have taken the view - as you say above too - that we wanted this money “gone” into the mortgage and untouchable if life happens. And actually given the specific 2.5 year time span we will still continue this we’ve decided even though we can see that there is circa £1k financial benefit in saving the OP. For us that’s currently not worth ceasing the other benefits of overpaying and we will
contunue to overpay as we’ve been doing till we sell and purchase in spring 2026.