overpay on interest only mortgage or save the cash, what would you do?

[happylarry]

value of our property has likely gone down since we bought earlier this year

in efforts to stay sane we are looking to hold onto it for the long term. if we were to move we'd probably get a new mortgage...

what would you do, save the cash or overpay mortgage?

we are 1 income family with baby #2 on the way next month!

thanks!

what is your mortgage rate?

if you can save it at a higher (NET not gross) rate then you are better off saving it

But if the net rate is lower you might as well pay it off your mortgage

How do you plan to actuall pay fpr your house when the mortgage comes to an end?... i mean do you plan to save it now and pay it all off? or what?

Do you have other savings already - ie do you have access to the equivalent of 3 months salary if you need it? If you overpay is it stored in a separate account and you can get it out again, or is it more of a case that you could take a repayment holiday etc?

thanks nannyL.... hmmm we have a 2 yr discounted tracker, 0.14% above base rate... i don't quite understand the savings v's mortgage rate, so is that higher/lower?

we can overpay up to 10% a year so could do a lump overpayment annually rather than monthly as we see how things go financially and the security of ds job... i'm not sure who's job is entirely safe right now?? worrying times!

Depends on how much net disposable income ou have. If you do not need savings pay mortgage off this will help when you come to remortgage as you will have more equity in the house and so will be able to get a better rate of interest. Additionally keep mortgage payments the same so you reduce mortgage more if you can.
Much better to be in a position of no debts since if anything goes wrong, unemployment sickness etc you will owe fewer people money.

ladymuck, yes we do have other savings over 3 months salary....

if we overpay (we were paying interest plus 1/3 on top onto capital repayment) we can't get it out again. i know it's accumulative but it was making a £2 a month reduction in the monthly repayments.... (big mortgage!!)

we bought in london, zone 2, hoping that one day house prices will recover....

MAybee in future look at Offset mortgage as you can use your savings to reduce the mortgage and if you ever need the cash again you draw it back. Used correctly it is a very good mortgage. Though the interest rate is slightly higher than most tracker rates.