Savings more than ISA limit

[newhighersalary]

I'm fortunate to have gotten a new job that enables me to potentially save more than the ISA limit (comission based).
Any suggestions on how to use the extra more efficiently?
I'm thinking of overpaying my mortgage. Any other savings account after tax would result in me gaining less, than the interest savings on mortgage (rate is 3.75%).
I did think of investing in a tracker fund - but I'm aiming to overpay at the end of my mortgage fixed term in 3 years. If the value of investments is low at that point , it would be difficult.

Thanks all

how much extra?

Between 10 - 15K.

Pension

Pension

Somewhere giving a nice high interest that stays safe then pay off a chunk of mortgage when it can be done penalty free.

pensión then

how old are you?
single?
children?

@Cookerhood@DisplayPurposesOnly
Pensions are a very tax efficient idea, but I want to use the money towards my mortgage.
I'm a single owner looking to get rid of as much as possible once my fixed rate ends.
I'm already putting some extra as it stands into pension

Early 40's. No children or partner.

Does such a thing exist?
Interest is charged when accessible, so even if I got fixed deposits , taking the money out would Incur tax.unless the rate was something crazy like double my mortgage rate, which isn't available at the moment.

in that case…. pension for sure

Pension over mortgage

If you want to be tax free, why not NS&I?

I work in investing and I don't really understand the love of overpaying on a mortgage on MN.

I have a mortgage at 0.99% (appreciate I'm lucky in that respect) and I choose not to pay it off as I earn a lot more than 1% on my equity investments. The last couple of years have been more challenging in fairness (although not for US tech stocks) but I've historically made 20-30% per year. Personally I prefer active funds over ETFs but you should aim for a well diversified portfolio across sectors, geographies and market cap.

Now that interest rates have peaked and GDP growth is resuming, you should be able to make 8-10% a year fairly comfortably in equities. Use the stocks and shares ISA wrapper and it's tax free but, if you’ve used it, you can still take £3k of capital gains tax free plus there's a dividend allowance.

Granted that not everyone likes to take a risk but once you've overpaid, you've lost the flexibility.

@blue345 The answer is Security.

Once the mortgage is paid off the house is properly yours. You aren't at the mercy of interest rate rises. If the OP is only 'potentially saving over the ISA limit' it doesn't sound like she has £££ available to risk.

Overpayments into my mortgage actually go into a separate balance. It's offset against the remaining balance for interest calculations, and allows underpayments without any extenuating circumstances.

However, I agree with you. Even on MSE the advice is to only overpay if the rate is higher than alternative investments. Currently I can clear 5%+ comfortably in my ISA so no overpaying, it's only the extra that I'm considering putting in. I have no idea why people on here with tiny interest rates like yours get excited about overpaying.

R.e. investments, isn't the general advice only to put in money you won't need for at least 5 years? I see it as more of a long-term thing to build up to. I used to invest small amounts consistently in the past, had a reasonably diverse portfolio but had to cash out after a couple of years. I did make a good return - I think it was about 10% - but had I sold at the wrong time it would've been about 5%. Still a good return considering how low savings rates were!

I was planning to do this again anyway, but I don't have the confidence to chuck thousands in at one go. Thanks for the tip on capital gains though - and any other recommendations on investing resources would be welcome!

Thanks, I'll have a look at those!
You're right, I don't have a lot to risk. And my income can be very variable.

Premium bonds

This.

Im a low earner i don’t have tons to invest. i’ve seen family members struggle in later years with housing. That security means the world to me.

Yes i’m aware it’s not the most financially sound option but it’s right for me. I have a pension and some savings. I save and i overpay. Happy with my choices.

Only premium bonds at tax free not their other saving products!

but if you’ve got loose change and maxed your internet tax free allowance and ISA, it’s useful. Remember though average luck will depend on how many bonds you have. MSE have a good calculator to estimate what to expect in winnings based on amount invested.

Also thanks to everyone else who replied - why would you recommend a pension? Is it because of my age?

I’d also say pension if you don’t need money pre when you’re 55

nowhere else gives you 20 or 40% boost that the tax allowance does. I suspect that a new labour government may start clamping down on tax relief at 40% on pensions over time, so I’d be making hay while sun shines if a higher rate tax payer.

b

because single

added to which, needless to say, tax relief

employers pension any good?

Tax relief and income/capital gains tax free.