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| DON'T believe the fake 'Martin Lewis' or 'MSE' ads |
| Martin: The 'SHOULD I OVERPAY MY MORTGAGE?' question
- Recent mortgages: Rates are high, so it's here the benefit of overpaying is most likely. - Older fixes: Your rate is likely still cheap, possibly below 2%, while the top savings rates are 2.5% easy-access or 4.2% for a year's fix. So, saving is likely to win. If so, put the money away UNTIL your mortgage fix ends (timing fixed savings to end then too is useful) and at that point, consider using it towards reducing your new likely-much-higher-rate mortgage. New. Boosted mortgage overpayment calculator: £100/mth overpaid can save £20,000+ interest. Overpaying isn't just a short-term gain, it reduces what you owe, so less interest compounds. The benefit can be huge. For example, our Mortgage overpayment calculator shows on a £150,000 mortgage at 5% (25yr term), overpay £100 monthly and you'd reduce interest by £23,000 and repay 4yrs & 6 months earlier. And we've just added a new function to the calculator, so you can compare the return on overpaying, versus saving. The gain isn't just theoretical - Pauline tweeted me a while back: "@MartinSLewis I overpaid my mortgage each month and saved 10 years in payments and £30k in interest. Thank you for your advice." If it looks like you should overpay... three checks. Even if the maths looks a winner... 1) Do you have other more expensive debts (eg, credit cards)? If so, prioritise clearing them, see overpay my debt? 2) Are there any overpayment penalties? Many lenders let you overpay 10% of your mortgage balance each year, but add penalties above that, which usually kiboshes any gains. See overpay without penalty? 3) Ensure you've an emergency fund. My rule of thumb is have three to six months' bills money saved, and only overpay any savings above that. Don't assume just because you've overpaid, if you were unable to cover the mortgage a few months, they'd say it's fine - you'd likely be in arrears. Reducing your mortgage size can get you a better deal. Overpaying might mean you drop a loan-to-value band when you next remortgage - as it reduces the proportion of your home's current value you're borrowing. The main bands where interest rates really drop are at 90%, 80%, 75% and 60%. So, if you overpay enough to drop to a lower band, it can be a big winner. Equally, if saving wins for you, save at top rates until it's time to remortgage then use those savings (leaving an emergency fund) to reduce what you borrow. To gain from overpaying, ensure your lender reduces the term not your repayments. Ask your lender to ensure each overpayment reduces your mortgage term. Some instead just lower your future repayments, and keep you paying over the same period, so there's no interest gain. Don't just shorten your mortgage term though, as that locks you in to higher future repayments - see my old Overpaying vs shortening term blog for more. PS: Overpaying and saving are ways to use your money with no capital (initial cash) at risk. The other choice is investing, where you hope for better rates, and are prepared to risk capital to get them. There's nowt wrong with investing (especially over longer terms), I just don't cover it, and it's tough to know what'll win without the benefit of hindsight. |
| The 2nd benefits cost of living payment to be paid from 8 Nov - who gets it, when & how. Full info on the new £324 payment. Related: £150 disability payment, pensioners' extra £300 payment, £400 energy bill discount for all. 10-year mortgage fixes now cheaper than 2 years, so should you do it? See cheap 10-year fixes? New. 15GB data Sim just '£4.62/month' - cheapest we've ever seen. Newbies to Lycamobile (uses O2's network) can get a 15GB/month Sim with unlimited mins & texts at £2.25/month for six months, then £6.99/month, so an average £4.62/month over a year. Yet it's a one-month contract so you can cancel anytime (note Lycamobile doesn't yet support 5G on iPhones). Do a full comparison using our Cheap Mobile Finder. Amazon 'Prime Early Access Sale' starts next week - we get a crystal ball out, for example, 50% off Alexa? This year Amazon's launching a new Prime event before Black Friday, and we'll be doing our usual analysis to help you spot the deals and the duds. See Prime sale predictions. Tesco toy sale: Up to 50% off including Barbie, Lego & Paw Patrol. The big pre-Christmas toy sale is one many MoneySavers wait for. See full Tesco toy sale analysis. New. FIBRE (38Mb) broadband & line rental just '£12.49/month'. Newbies to Shell Energy pay £4.95 upfront, then £21.99/month, but get an automatic £65.97 bill credit within two weeks (so three months free). AND you can claim (don't forget) a £110 Amazon voucher within four months - so if you'd spend there anyway, factor all that in and it's equivalent to £12.49/month over the 18-month contract. Even better: Speedily compare all broadband deals. Annual railcards 1/3 off codes... pay £20, not the usual £30. These digital cards usually get you a third off travel and include: 16-25 | 26-30 | Family & Friends (1 to 4 adults 1/3 off if with 1 to 4 kids, who get 60% off) | Two Together (any named pair) | Senior. Works on 3-year railcards too. See railcard codes. |
| New. Top fixed savings now pay 4.56% - the highest rate since 2009, with easy access up to 2.5% Check if your bank has passed on rate rises - many haven't. If not, ditch & switch The UK base rate is up, and after recent turmoil, market interest rates are up even more. Both should push savings rates higher, and have for some top accounts. But millions have cash in accounts that pass on little or none of the rise. So vigilance pays - check your savings now. EARN UNDER 2%? Leave if you can, as even bog-standard easy-access rates pay more. Of course, with inflation still sky-high at just under 10%, in real terms, your money is shrinking. However, that's not an excuse for inaction - there are big differentials out there, and the more you earn, the more you mitigate the loss. Fixed rates are out-powering easy-access right now. Fixed savings - much like mortgage fixes - go up with long-term City interest-rate predictions, which have rocketed in recent weeks, while easy-access accounts tend to follow the base rate more. Therefore, right now fixes look good value.Warning: Rates and top payers can change by the hour, so all links go via our savings guide, which we update as quickly as we can.
There are longer fixes but there's little premium (max rate 4.61%) for going longer - see long fixed savings. Is it worth fixing savings now if UK rates may rise further? That's incredibly difficult to answer, as things are so uncertain - so we'll do our best, but can't promise to be right... For those who can lock cash away, as one-year fixes out-pay easy-access by nearly 2 percentage points, you'd need rapid and large UK base rate rises for easy-access to win over that period. It's possible, but uncertain, while the instant gain of fixing is certain. Of course, it could be that if you waited until after the next Bank of England base rate decision on 3 Nov, you may be able to fix at much higher rates. Yet some of the predicted interest rate rises are likely already factored in to current fixed rates, and while there's room for them to rise further, we don't know by how much. So overall, our best guess is that fixes look decent, but we wouldn't lock in for too many years in a rising, uncertain market. Cash ISAs should only be for those who pay savings tax. Most don't... though more do than before. The personal savings allowance (PSA) allows basic-rate taxpayers to earn £1,000/year of savings interest tax-free (higher-rate taxpayers £500/year). So at today's top easy-access rate, a basic-rate payer would need just over £50,000 of savings to generate that, but just £23,800 in the top one-year fix. If you've far less, just go for normal savings as the interest is normally far higher. But if you're close or over those limits, and you're likely to earn interest over the PSA, cash ISAs come into their own, as the interest is always tax-free and doesn't count for the limit. See how to compare savings rates with cash ISA rates if you pay tax. Can you boost interest further? Some specialised options in our Savings section pay even more: - 50% bonus for many on universal credit or tax credits. See Help to Save. - 25% bonus for first-time buyers aged 18 to 39. See Top Lifetime ISAs. - Earn up to 5% on smaller amounts if you save monthly. See Regular savings. - Earn 5% on smaller savings. See Current account savings. - Are Premium Bonds worth it now the prize rate is up? See Premium Bonds. - Prefer to invest? Higher returns, but more risk. See Stocks & shares ISAs. | |||||||||||||||
| Ends Sun. 5p/litre off fuel at Morrisons with £40+ in-store spend. See 5p off fuel. Updated. Find your NEW take-home pay after mini-budget changes. We've updated our Income Tax & National Insurance Calculator to take account of all the in, out, shake-it-all-about national insurance and tax cuts, and have updated it again after the Government scrapped plans to abolish the 45% additional rate tax band. FREE audience tickets to The Martin Lewis Money Show... oh and The Masked Singer and The Graham Norton Show. Obviously there's a clear highlight in those three, but just to let you know you can register online to be in the audience for popular TV shows. Free audience tickets Get £15+ cashback on £50 supermarket spend. Ends Fri. For newbies to cashback site Topcashback, though existing users can get £5+ off. Full explanation in supermarket cashback analysis. 'Thank you - after your talks with energy firms, I've saved over £1,000.' This week's success of the week comes from Mavis who's benefited from Martin's request for energy suppliers to allow fixed customers to move on to the new price guarantee penalty-free. She said: "We locked in to a two-year fix at the end of August, which would have cost £3,600 a year. After your talks with suppliers, we waited to see what would happen. We've now been told we will be transferred to the price-capped tariff without any penalty. New annual cost: £2,300. Thank you." Send us your MoneySaving successes. 90% off one month's 'tailored' dog food (so £25 worth for just £2.50). MSE Blagged. Plus 30% off the second month. Add info about your dog and the company creates a recipe especially for your four-legged friend. Newbies only. Tails dog food £35 Tower air fryer at Iceland (normally £60). If you're after the popular kitchen appliance, this is a cheaper version (some brands are £200+). It has decent reviews and is available from Saturday. Tower air fryers |
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| AT A GLANCE BEST BUYS
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| THIS WEEK'S POLL Have you turned on your heating yet? Energy bills have soared but it's beginning to get much colder, so we want to know if you've turned on your heating yet or whether you've decided to hold out for a little longer because of spiralling costs. Take part in this week's poll. Almost half of MoneySavers spend 30% or less of their income on housing. Last week, we asked what proportion of your monthly take-home pay you spend on accommodation and nearly 8,000 people responded. Excluding those who spend nothing, just under half said they spend 30% or less of their income on housing. The results are almost exactly the same as when we ran this poll six months ago. See full housing poll results. |
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| MONEY MORAL DILEMMA Our neighbour is selling clothes we've given them - should we say something? My partner and I gave our neighbour some clothes that no longer fit us, as well as some expensive designer underwear that had never been worn. To our horror, they're now advertising what we've given them for sale online. Should we say something about them taking advantage of our generosity and risk a good friendship, or keep quiet? Enter the Money Moral Maze: Our neighbour's selling on clothes we gave them | Suggest a Money Moral Dilemma |
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| MARTIN'S APPEARANCES (WED 5 OCT ONWARDS) Mon 10 Oct - Guest-presenting Good Morning Britain, ITV, from 6am, including Martin's Money Monday MSE TEAM APPEARANCES (SUBJECT TBC) Tue 11 Oct - BBC Radio Cambridgeshire, Mid-morning with Jeremy Sallis, from 10.45am |
| CANDLES, COINS & CHOCOLATE... WHAT HAVE YOU 'WOMBLED' FOR FREE? That's all for this week, but before we go... MSE Forumites have been sharing their 'wombling' successes. If you've ever picked up coins from the street, for example, or rehomed furniture when the neighbours were having a clear-out, you're a womble. Forumites have recently rescued a discarded scooter, a large unused candle, a working slow cooker and a bag full of unopened chocolate bars. It's not been a good year for coin collecting, though, with one Forumite picking up just £3.11, compared with £16 last year. Share your own in the Wombling successes MSE Forum discussion. We hope you save some money, stay safe, |
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