overpay mortgage or save for improvements

[Astonetogo]

I’m hoping to move in the next 2-3 years, and have got a bit of extra money to put by each month. I am currently in a house less than 10 years old, which I bought because it was low maintenance and I didn’t have the budget for a place that needed work doing. Next time though I’d like to look for a cottage, which no doubt will need more work, as older properties do.
General wisdom is to put any extra saving towards the mortgage, but I’m thinking of putting it aside for work on my future home. Would you agree this is the best plan?

That depends on how much interest you are paying on your mortgage.

If you are paying a very low interest rate beginning with a 1 or a 2 say, then it makes more sense to save the money in a high interest account. But if you are paying a mortgage with a lot of interest, I would focus on making overpayments to reduce the amount you owe.

You may well find that you can only overpay by up to 10% each year, many lenders have this rule but check with your lender.

@Twiglets1 - why did you quote the OP?

OP - put extra money towards paying the debt you have now.

As Twiglets1 rightly points out it depends on the rate of any debt you have, but not just the mortgage.

It's a breath of fresh air to see savings finally paying better rates, we lock away as much as possible and do quite nicely from it now - but are lucky enough to have cleared mortgages.

A lapse in concentration

Why do you think it's better for OP to pay a chunk off their mortgage if the interest rate is very low and they are planning to move in the next 2-3 years rather than put it in a high interest account?

Thanks all! I do have a good mortgage rate at the moment, although absolutely nowhere near paying off the mortgage. My thinking was that owing less on the mortgage won’t do me much good if I don’t have money available to install a new kitchen (or whatever is needed). If I have to borrow for that, then I’ll be paying interest on my borrowing, so I thought keeping cash to hand was a good plan?

Yes @Astonetogo I agree with your thinking. As you have now confirmed that you do have a good mortgage rate at the moment I would save the money for now in the highest interest account you can find that doesn't lock the money away for years. Just be conscious that the mortgage rate you are paying now may increase at some point if you have a fixed rate mortgage that will be ending in the next year or so.

Use the money saved to pay for removal expenses in the future and to put down a bigger deposit when you move or to spend on updating the property if it needs it. You can get some good deals right now with high interest savings accounts.

Thanks @Twiglets1

I would only pay the mortgage off if the rate is higher than you would get in a high interest account OR it took you into a new bracket, so you would get favourable rates when it came to remortgage (and even then, high interest rate and pay off a chunk when it comes to change).

Overpay the mortgage then when you move you have less to borrow. If you need to finance a new kitchen, you can save for it when you're in situ.