Mortgage increasing by £250p/m wiping out savings

[oddexperience]

@bluehere Not sure anyone would want to rent a room next to a 2 year old and a newborn...

 

[rhodesponting]

@oddexperience Honestly there's such a shortage of housing someone probably would

 

[resjudicata]

@oddexperience If you've been saving £300 per month, how much have you now saved?

You could use those savings to reduce the mortgage before renewing (there shouldn't be any early repayment charges when you finish your fix), which would either drop the monthly payment or the length of the mortgage depending on what you choose.

Into the future, it's debatable whether you should be saving instead of overpaying with that money. Having some accessible money is a good idea, but you don't need much - overpaying the debt at 5.9% is still a good idea, given you could just borrow money at that % (or lower) in the future as required.

 

[oddexperience]

@resjudicata We have a £10k savings pot.
Also have £7k put aside to live off while I'm on Mat leave.
L

 

[resjudicata]

@oddexperience That 10k could reduce your payments by about £50 a month, but for flexibility could be better to just keep in a savings account. You'd probably be losing the equivalent of 1% (5.9% debt- 5% savings) of it per year doing that, but it atleast it would be readily available.

Mess around with this to see what might be worth doing.

https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

 

[oddexperience]

@resjudicata Yeah I think we'd rather have that emergency fund there for the time being, at least til the kids are out of childcare and we don't have the £1k monthly nursery fees.