What are people doing with mortgage interest 'savings'?

R

rmelly

Guest
Given that many people who have mortgages have experienced significant cuts in their monthly repayments over the last 3 months, what are people doing with this money? e.g. saving, rainy day fund, mortgage overpayments, repaying/overpaying other debts (e.g. car loan, CC or overdraft), lifestyle spending, new car loan?

Obviously some has been neated by the income tax levy and for a growing number of people the benefit has been cancelled out by pay cuts, job loss, loss of a second income, or it may have been negated by other increases e.g. gas/electricity, health insurance etc.
 
Savings - although I have considered just paying it into mortgage acc and letting it build up there so that there are 'emergency' payments available in that account - mind you if its in savings its stil accessible to me for emergency usage anyway so six of one and half a dozen of the other.

I suppose the key here is - Im not spending it.
 
We had started to overpay each month before the cuts. We have left the repayments at pre cut rate so chipping away faster at the capital. Had considered making a lump sum payment too but decided against it as we'd rather have access to cash if needed.

No debts apart from mortgage.
 
We have kept our repayments the same so hope to overpay but might do as others are and just keep it in the account in case of any problems. It still reduces the interest so has a benefit.
 
we took the first two decreases and put additional money into savings, the next two we didnt take and reduced the term of the mortgage instead.

we have no loans other than mortgage
 
Tracker mortgage is now at 3%, Northern Rock savings are at 5%. The reduction is of course going straight into savings. I did think of reducing the term, but the numbers do not stack up for that at present; it is more effective to put it into savings. The key is that the money is being saved, not spent!
 
Sadly the change in TRS ate up the 0.75% reduction, and the 1% income levy has spoken for the other 2 reductions so far, so I haven't got anything more to play with.....

(by the way I'm not a high earner, I've got a low mortgage!)
 
gipimann how did the change in TRS affect you. i thought it was going up, not down
 
I'm not a first time buyer, so TRS was reduced from 20% to 15% for me. I am in year 4 of a 20 year mortgage, so there is still an interest element in my repayments (standard variable mortgage).
 
What are we doing with the savings?
Maynard Keynesian spending. Its the best thing for the economy
(except we've been spending in Belfast - oops)
anon473
 
ECB + .7% tracker.
Overpaying our mortgage for the past year, The rate cuts go straght off the capital.
2 years into a 35yr mortgage.
If we can keep going ae we are we will be mortgage free in 14yrs.
 
Once the last cut feeds through I''m setting up an overpayment on the mortgage. It's an opportunity to reduce the term of the mortgage significanty that can't be ignored.
 
diziet

Are savers not charged dirt of about 20% on any interest earned in the northern rock account?

this would reduce interest on the savings account to about 4%
 
Mortgage now at 2.45%. Extra repayments going into 8.0% a/c with Anglo ( how long that rate will last for not sure!) - once net mortgage interest goes above any net savings rate we can get we'll transfer savings into the mortgage.
 
don 08
interesting

i never considered saving the money like this and then injecting into the mortgage, i thought we were doing the right thing increasing capital payments on the mortgage
 
mrsg09 said:
don 08
interesting

i never considered saving the money like this and then injecting into the mortgage, i thought we were doing the right thing increasing capital payments on the mortgage
Click to expand...

If your savings interest rate ( net of tax) is greater than your mortgage interest rate ( net of TRS) , then savings and lump sum injection would be the best way to go. You will also have the safety of a lump sum you can access easier than equity release on a mortgage in case of unforseen circumstances. But it does not make sense from monetary prospective unless the interest rates are the right way around.
 
our interest rate is currently .59% over ECB

so it would be easy enough to find a savings account with interest rate greater wouldnt it?

thanks for your advise, i thought we were doing the right thing reducing the term,

thanks again
 
Thats a very good mortgage rate. There is nothing right or wrong!! At least its going towards something.

Just means you are effectively saving at 1.94% net ( assuming 25% TRS relief), when you could be getting 6.16% net with Anglo ( 8% with 23% DIRT) or check the other best buys regular savers. Something with flexibility on how much you put in every month ideally.

Every little helps!!

We're on discounted tracker of + 0.45% until Sep 09 - so would hope to get the extra savings until Sep at least. We'll keep an eye on it anyway.
 
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