Mortgage/Savings..

wijcc

wijcc

wijcc

Soldato
Joined
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Of those people with mortgages here, how much money/savings do you hold (would you hold), in case of problems paying your mortgage in future or the house needing repairs? Or do you just at the end of each year/month make overpayments as and when you can?
Trying to decide if I should set a ISA for emergency money funds or just make an overpayment on the mortgage. I have a tracker repayment mortgage btw.
 
wijcc said:
Of those people with mortgages here, how much money/savings do you hold (would you hold), in case of problems paying your mortgage in future or the house needing repairs? Or do you just at the end of each year/month make overpayments as and when you can?
Trying to decide if I should set a ISA for emergency money funds or just make an overpayment on the mortgage. I have a tracker repayment mortgage btw.
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A cushion is necessary without question.. how much is up to you. My stowed away savings could 'run' the house and pay the mortgage for 3 years, but I would be comfortable if that dropped to 1 year. Once I get to the end of my low fixed rate term, I'll consider overpaying.

Less than 12 months.. not so sure.
 
Cushion, especially if it's not a new house. We're aiming to have about 5K sitting about, but that'll take a long time to build up as there's things that simply have to be done before savings at the moment (boiler for a start :( )
 
Getting married shortly.... so FA savings atm.


I like to have 3 months as I can nearly always find work within that timeframe.
 
Bear said:
Because using it to offset your mortgage may give better returns?
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Plus you need to have a lot of money sitting there to make a better return than just getting a better deal in the first place. The last time we remortgaged the calculation was we needed 22k sitting there in the account we paid the mortgage with to be evens with just getting a better deal in the first place non offset.

That was nearly 3 years ago, but I bet it's not much different.
 
mrbell1984 said:
An ISA might have a smaller return than the interest paid on your mortgage :p that is why.
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That wasn't the question.

By this point, we were talking about where to put said cushion.

Further, even if the mortgage rate was higher than whatever you can get from a savings account, it still makes sense to keep some cash accessible anyway.

Read up :)
 
dannyjo22 said:
Plus you need to have a lot of money sitting there to make a better return than just getting a better deal in the first place. The last time we remortgaged the calculation was we needed 22k sitting there in the account we paid the mortgage with to be evens with just getting a better deal in the first place non offset.

That was nearly 3 years ago, but I bet it's not much different.
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The offset portion of our mortgage is just normal feature on ours. Ours is a no fee flexible tracker with no tie in, 2.4% above base rate, which allows you to over pay and offset your savings. We took that out around 3 years ago and whilst it wasn't the best you could get (First Direct never are) it certainly wasn't uncompetitive and offsetting just made it even better.
 
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The interest on my mortgage is 1.25% and i currently have a 2 year fixed rate isa at 3.7% so all my spare money goes into my isa.

So for me personally it makes sense to put money into an isa rather than pay more off the mortgage.

Definitely good to have some funds put by should things take a downturn.
 
We have this regularly.
You should always have some savings available.

Key consideration 1, is your mortgage flexible, and hence can you draw down overpayments. If so chances are you can get away with a lot less savings. Just don't expect the mortgage to work like a deposit account. You may have to go through some limited checks and will probably have to pay TT fees etc. Fees won't be a fortune but could be significant as a percentage if your only after say £1000

If your mortgage is not flexible then overpayments are effectively locked in and will potentially be a lot harder to get from the lender. Eg if you've been made redundant they may not release. Again likely some small fees will be payable. Its down to the lender to make the decision they could say yes or no.

Do you have more than one income? If so you can usually get away with lower savings.

Do you have very marketable skills? The more marketable the easier it should be to get a job. Also consider how many roles can come up for what you do, the fewer roles that come up the longer you may have to wait. You could be the best brain surgeon in the UK, but if no one has a vacancy you may still not get a job until a vacancy appears.

Lastly the differential between ISa rate and the rate your paying on mortgage. You can easily get 3% tax free in an ISA, and assuming your not talking of holding way more than £6k then all your savings can be tax free. If your paying significantly more than 3% interest on your mortgage then bearing in mind the factors above paying down the morgage it more beneficial, the closer your mortgage rate is above 3% then the less the impact. If by some chance your paying under 3% you definately do not want to pay down early.
 
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