Should I invest or overpay my mortgage?

(This is not financial advice.) With interest rates higher than before, a dilemma many investors have is whether to pay their mortgages down or continue investing. Some points to consider:

• If you invest, could you make a higher return than your current interest rate? Remember to factor in all your costs, and that you can't predict capital growth.
• Can you overpay your mortgage? Many lenders allow overpayments of up to 10% a year, but not all do.
• Which mortgages are most tax efficient to pay down? Personal-name and limited company mortgages are taxed differently, so we recommend getting advice.
• Is it worth paying down a mortgage to reach a lower loan-to-value band? Some lenders offer different products at lower loan-to-values, but not all.

Once you have overpaid, it isn't straightforward to take the money out again. The lender may not allow further advances, and if it does, it involves a full underwrite like the original application. If you want to overpay and keep the flexibility to draw money back, an offset mortgage may be worth looking at.

Why you might want to invest

With the market slower than in the last couple of years, there may be less competition from other buyers. Rental demand is high in much of Scotland, and it is best to speak to a local letting agent for insight into your area.

As you can see, there is a lot to think about. If you have any questions, please get in touch.