Paying Of Mortgage Vs Savings.

[Frugal Git]

This pretty well sums up the world right now! Do some overtime, or haggle with your insurance renewal, or energy/phone suppliers, or just ask for a best price when you next buy tyres.

I'll have to beg to differ.

Overtime would not pay anywhere near what I've made by maximising my savings. Plus I and many other salaried workers don't have the option.

Ringing around insurers for an hour to save £20 on my renewal cost, repeating ad nauseam the same rubbish information is also pointless. Comparethemarket and the like are fine, but dealing with insurance companies is not worth my sanity on the phone. And again, I maybe save £50 at best for an hours work. Not bad, but each and everyone of these current account set up things has worked out at a far higher hourly rate.

I will shop around ridiculously sometimes on tyres though!

[nnails]

General opinion is dont both with regular saves are bit con and lot of hastle. so that just sort leaves high interest normal accounts which you just max out and user as buffer in case emergency other than that pay of mortgage

[nnails]

Another question i have - is it better to pay in to pension invest in ftse or pay of your mortgage quicker. This relevant with last week stock market shock.

I paused my personal pension contubtion begining of year so i could by my house and may carry on like that a 2 or 3 years to pay down my mortagage quicker. I have been paying in for around 15years.

[nnails]

You can really maximise futher as a couple

Santander 123 @ 3% - 2x single, 1 joint - 60k. 1800 p/a interest plus cashback

Club Lloyds @ 4% - 2x single, 1 joint - 15k. 600 p/a interest plus 18 cinema tickets

TSB @ 5% - 2x single, 1 joint - 6k. 300 p/a interest

FD, HSBC, Lloyds reg savers - 1 each per person, roughly another 700 p/a

Halifax Reward - 2 x single, £120 p/a

Tesco Current accounts - 18k (can have three each) @ 3% - 540 p/a

Nationwide - use the travel insurance cos you can have that indefinitely vs the interest (which is only for a year)

Then use Tesco internet saver to hoover up the interest and allows you to create your own DD's to satisfy requirements.

That's 4k p/a gross for a days work. Not bad. It's well worth 1 day of my time - I've set it up for my parents and advised my sibling and partner to do the same. If netting 15k as a family p/a is not worth your time, good on you!

If you have more, then start maxing ISA's out, but go stocks and shares rather than cash. Oh, and use your SIPP first before anything else because you'll never beat that initial tax relief gain no matter what you save in.

I do OK for myself via these methods and I'm single. Beats having the liability of a house.

I have done most of them before i brought my house.

lloyds and halifax they did not accept direct debits to my other accounts to count as standing orders. had to be paying a bill of some sort. I could not be bothered to argue. So i just pocketed the

cinema tickets and £100 for joining and moved on. By changing bank accounts i made £500 one year.

Had major falling out with santander when they took over alliance and liecester. Biggest problem then was they paid interest yearly and you could not work out what you was getting because of the takeover and hopless website and staff.

tesco you have to watch out they will charge you if you dont pay £750 month in a fee. and you cant walk in to branch and pay it in and then walk out door and take it back out again. internet only.

i did use to go to alliance liecester cash machine draw money out and walk to desk and put it back in twice month to fulfil there requiremtns at the time.

But still no ones answered the orignal question do you get more interest by doing the above than paying down the mortgage earlier and being charge less interest on mortgage as loan value as shrunk.

[sPinwheel]

Sounds like a job....for Microsoft Excel.

[bobbo]

Depends on your tax rate period. If your bank interest less tax is more than your mortgage interest then pop it in the bank.

[Frugal Git]

I have done most of them before i brought my house.

lloyds and halifax they did not accept direct debits to my other accounts to count as standing orders. had to be paying a bill of some sort. I could not be bothered to argue. So i just pocketed the

cinema tickets and £100 for joining and moved on. By changing bank accounts i made £500 one year.

Had major falling out with santander when they took over alliance and liecester. Biggest problem then was they paid interest yearly and you could not work out what you was getting because of the takeover and hopless website and staff.

tesco you have to watch out they will charge you if you dont pay £750 month in a fee. and you cant walk in to branch and pay it in and then walk out door and take it back out again. internet only.

i did use to go to alliance liecester cash machine draw money out and walk to desk and put it back in twice month to fulfil there requiremtns at the time.

But still no ones answered the orignal question do you get more interest by doing the above than paying down the mortgage earlier and being charge less interest on mortgage as loan value as shrunk.

Re-read what i wrote.

Tesco Internet saver accounts allow you to create your own direct debits.

You can satisy any banks criteria with two of those.

Yes tesco current accounts charge you if you don't pay in money in the month. So do lloyds.

There is a simple solution to that. Pay the money in by standing order. Then set up another one from that account to pay it out to the next one.

Regular savers are not a con, merely misunderstood. You drip feed money into them. You get 12 months interest on the 1st month, 11 on the second and so on. They require 10 minutes to set up and them forget about for a year.

None of this is tough.

However if you don't want to put in a fractional amount of work, or cannot grasp how to play the system easily, overpay the mortgage and life is much simpler.

Edited September 3, 2015 by Frugal Git

[gf3]

It's the forget about it for a year was my problem. I found myself counting the months left to go. Waiting for it to come out thinking about it most days. And what for £100.

[SpectrumFX]

Not being funny, but ut takes less than 10 mins to make that £100 per year via those regular saver accounts. Do you earn £600 p/h?

Be honest, it takes more than 10 minutes, i'd be hours looking into it, and it's a faff to go through every year and means another account with passwords and security ******** to deal with and remember. And all for what benefit? For a 3.5% return on £3,600 I can ring up my mortgage provider in 2 minutes and pay that off the mortgage.

[SpectrumFX]

I have done most of them before i brought my house.

lloyds and halifax they did not accept direct debits to my other accounts to count as standing orders. had to be paying a bill of some sort. I could not be bothered to argue. So i just pocketed the

cinema tickets and £100 for joining and moved on. By changing bank accounts i made £500 one year.

Had major falling out with santander when they took over alliance and liecester. Biggest problem then was they paid interest yearly and you could not work out what you was getting because of the takeover and hopless website and staff.

tesco you have to watch out they will charge you if you dont pay £750 month in a fee. and you cant walk in to branch and pay it in and then walk out door and take it back out again. internet only.

i did use to go to alliance liecester cash machine draw money out and walk to desk and put it back in twice month to fulfil there requiremtns at the time.

But still no ones answered the orignal question do you get more interest by doing the above than paying down the mortgage earlier and being charge less interest on mortgage as loan value as shrunk.

Personally I'm better off paying the mortgage down. I don't know enough about you to know if that's true for you too.

[Frugal Git]

Be honest, it takes more than 10 minutes, i'd be hours looking into it, and it's a faff to go through every year and means another account with passwords and security ******** to deal with and remember. And all for what benefit? For a 3.5% return on £3,600 I can ring up my mortgage provider in 2 minutes and pay that off the mortgage.

Open 1st direct accounts annually.

Transfer existing savings out of easy access saver it was converted to, and bung into current account for later allocation into isa or wherever.

Click on open regular saver.

Go though 3 minute process of opening account and saying where to fund 300 p/m from.

Account opened, forget about it.

The first time you do it might take more to set up the correct standing orders (1800 in, 1500 out of funding current account), but after that its simplicity itself, year in, year out.

So yeah i was being honest. Pay it off the mortgage too if you like, i dont have one, so i use these accounts. And regarding those, all i see is people refusing to make a minute amount of effort to make quite a bit of cash.

[nnails]

Re-read what i wrote.

Tesco Internet saver accounts allow you to create your own direct debits.

You can satisy any banks criteria with two of those.

Yes tesco current accounts charge you if you don't pay in money in the month. So do lloyds.

There is a simple solution to that. Pay the money in by standing order. Then set up another one from that account to pay it out to the next one.

Regular savers are not a con, merely misunderstood. You drip feed money into them. You get 12 months interest on the 1st month, 11 on the second and so on. They require 10 minutes to set up and them forget about for a year.

None of this is tough.

However if you don't want to put in a fractional amount of work, or cannot grasp how to play the system easily, overpay the mortgage and life is much simpler.

As I said. I know the routine. I HAVE DONE ALL ABOVE BEFORE. Lloyds and Tesco rules mean you have to have bit more capital to play with which is not as true if you spent on buying house. Get fined by 5quid each or going overdrawn and beening stung that way is not plan I like idea off. There is no need to patronize people on the forum.

[frederico]

Tbh IMO anyone faffing about with these accounts must be a bit desperate,

[Frugal Git]

As I said. I know the routine. I HAVE DONE ALL ABOVE BEFORE. Lloyds and Tesco rules mean you have to have bit more capital to play with which is not as true if you spent on buying house. Get fined by 5quid each or going overdrawn and beening stung that way is not plan I like idea off. There is no need to patronize people on the forum.

If it came off as being patronzing, i apologise. Your previous post stated you were going round withdrawing money at the counter, getting fined for not adhering to the terms of the accounts.

That can be rectified by standing orders.

You also said that you could not satisfy the direct debit requirements easily. That too, can be rectified using the Tesco Internet daver accounts mentioned.

I have never once been in a branch to do any of this. So, with all due respect, you appear not to have done all the above and you didn't appear to read what i wrote.

I maintain that if you follow and understand the rules it isn't difficult, and is lucrative effort expended.

I was trying to help by pointing out how you can do it. If you don't want to, fine but there's no reason to take offence.

Frankly I'd rather people didn't bother now because if everyone did it they'd probably remove the ability to make the most of it.

Edited September 3, 2015 by Frugal Git

[Frugal Git]

Tbh IMO anyone faffing about with these accounts must be a bit desperate,

Or smart.

[Noallegiance]

Or smart.

The Missus & I don't mind our extra circa £130 per month that Santander pay us. And I faff not.

[frederico]

The Missus & I don't mind our extra circa £130 per month that Santander pay us. And I faff not.

Now that's different, I'm with Santander, swapped from Barclay's the useless twats.

[nnails]

Now that's different, I'm with Santander, swapped from Barclay's the useless twats.

IT is if that barclays dont want to be bank at moment. I dont know any one who banks with rbs either

[SpectrumFX]

Open 1st direct accounts annually.

Transfer existing savings out of easy access saver it was converted to, and bung into current account for later allocation into isa or wherever.

Click on open regular saver.

Go though 3 minute process of opening account and saying where to fund 300 p/m from.

Account opened, forget about it.

The first time you do it might take more to set up the correct standing orders (1800 in, 1500 out of funding current account), but after that its simplicity itself, year in, year out.

So yeah i was being honest. Pay it off the mortgage too if you like, i dont have one, so i use these accounts. And regarding those, all i see is people refusing to make a minute amount of effort to make quite a bit of cash.

Fair enough. I've put quite a lot of effort into it and worked out that I can get a better return for my money in other ways.

Something that would concern me if I was following your approach is that you're essentially putting your money into the banks most desperate to have it i.e. those that are in the greatest financial trouble. Do you worry about them going under, or are you entirely reassured by the governments deposit guarantees?

[Malditos_Usureros]

Nobody seems to be mentioning the obvious alternative (although not available to the OP), having an offset mortgage.

With an offset mortgage you can put any amount in your offset account and get the same rate as your mortgage, tax free.

- No limit in amount (well your outstanding amount )

- No tax

- Immediate access

Obviously if you can find a bank that offers higher interest after tax than this, you put the max amount there, and the remainder in your offset account.

If you pay off your mortgage, that money is gone, but in an offset it's available to you in case of an emergency.

[Frugal Git]

Fair enough. I've put quite a lot of effort into it and worked out that I can get a better return for my money in other ways.

Something that would concern me if I was following your approach is that you're essentially putting your money into the banks most desperate to have it i.e. those that are in the greatest financial trouble. Do you worry about them going under, or are you entirely reassured by the governments deposit guarantees?

I'm always within the guarantees for any given bank, so I'm generally gonna trust them and the gov on this, cautiously....

So also the one advantage of pretty much all the bulk being in current accounts is they are very easy to access and transfer from, so if i get a sniff (and lets face it - those of us who post on here should be ahead of that game) of real trouble for an individual institution, that money is out of there.

What i dont like is putting an money in these banks in the first place, but at least I'm playing them.

All my eggs aren't in the banks either - there's plenty outside of banks too im other assets, so i feel like I'm pretty well diversified when tshtf.

I gey you can do better - hell i am loving these volatile markets at the moment. A years worth of interest on 5k is available in 30 seconds on the dow every night in what seems like childs play. But, at the end of the day, that still involves putting capital at risk. The current account game...very low risk/reasonable reward.

[Frugal Git]

Nobody seems to be mentioning the obvious alternative (although not available to the OP), having an offset mortgage.

With an offset mortgage you can put any amount in your offset account and get the same rate as your mortgage, tax free.

- No limit in amount (well your outstanding amount )

- No tax

- Immediate access

Obviously if you can find a bank that offers higher interest after tax than this, you put the max amount there, and the remainder in your offset account.

If you pay off your mortgage, that money is gone, but in an offset it's available to you in case of an emergency.

This is an excellent point. Back in the day, i offset my savings against my parents mortgage. We cleared it very very fast doing that, but should i have needed it the money was always mine and accessible if i needed it.

[sPinwheel]

I haven't found anything that beats Santanders 123 account. Instant access savings up to 20k paying 3%.

[winkie]

I am not qualified to offer you advice and you haven't provided enough information to enable proper advice to be given but, if I was in your shoes, I would

max out all available ISAs each year

have a buffer of at least 6 months total living expenses (ideally 12)

then pay off the allowed 10% of the mortgage each year

then add to the savings accounts you mention

others will have different views and you will (and should) form your own opinion

A good paying rate cash ISA split 50% 50% to paying down mortgage depending on available monthly saving pot and debt and credit interest rate paying.....down playing debt is just another way of saving, especially if the debt interest payable is more costly than the credit interest payable.