Should you overpay your mortgage or save – and how to make it work? And no ‘no standing charges’ tariffs

Martin Lewis on whether you should use savings to overpay your mortgage - factoring in your emergency fund, your rates, and whether overpayments come with penalties. Martin gives his reaction to the Bank of England announcing just before we recorded that interest rates have remained unchanged at 3.75%. We look at what has happened to Ofgem's no standing charges tariff options promise. This week’s Tell Us is what money rule do you follow now that you once thought pointless or over the top, and we’re joined by a special guest for that at the end of the pod. Martin explains why he has written a letter urging the Scottish Government to improve their Power of Attorney system. And Money Mastermind is on travel rights, but this week, Martin didn’t write the question! If you want to ask Martin a question, you now can! His Question Time podcast lets you ask Martin absolutely anything and everything (within reason!) – so if you’ve always wanted to know what colour his eyes are, what he's planning to do in his eventual retirement, or have a very complicated question about your personal finances, email it to [email protected] mailto:[email protected].

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 1:47Martin Lewis?

  They've ended up with a halfway house that no one is that keen on.

• 1:50Speaker 04

  I'm better upping the monthly payments or paying a big lump off in one go.

• 1:54Martin Lewis?

  Is it better to use that money and put it into a savings account? Or is it better to pay off your mortgage? The but is what is the interest rate?

• 2:05Martin Lewis?

  Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Now, usually much of it comes from my BBC Radio 5 Live show with Adrian Charles, but there's also bonus money-saving tips for you lucky, lucky podcast listeners. In today's pod, is it better to use your savings to overpay your mortgage? With UK interest rates likely to drop this year, savings rates will likely drop too. But many are locked into fixed-rate mortgages, so does that change the overpay question? Answers to that and a lot more coming up. Then, what has happened to Ofgem's promise of no standing-charge tariff options? We'll discuss.

• 2:47Martin Lewis?

  This week's tellers is what money rule do you follow now that you once thought was pointless or over the top? And we're joined by a special guest for that at the end of the pod. And this week's Money Mastermind is on travel rights, but, shock, horror, I didn't write it. Find out who did later. Play the theme tune.

• 3:26Martin Lewis?

  Right, before we get on to today's big topic of should you overpay your mortgage? And if you do, what's the most effective way to do it? I've got a whole host of short topics I want to speedily run through, from the interest rate news this week, to power of attorney in Scotland, and what happened to those no standing-charge tariffs we were promised in January? Let's start with interest rates. Over to Adrian.

• 3:53Speaker 04

  The Bank of England has announced interest rates are staying at 3.75%. A business reporter, Hannah Mullein, joins us. Hannah, what's behind this decision? Have we got any more of the detail on the voting and so on?

• 4:05Speaker 05

  Yeah, hi Adrian. We do have some detail. So, yes, sticking at 3.75%. We saw that rate cut in December, so the bank did say that... There was going to be a gradual path downwards on interest rates and it is gradual. But we have had the the voting. So there's nine members of the committee that vote on this and it was a five four split. So four members voted to reduce the rate by naught point two five percent. And we are sticking because that inflation target of two percent is still quite far out of reach. It's three point four percent in December. That's the first time it rose in five months. And it is a little bit stickier maybe than we would have liked. So they are sticking now.

• 4:48Speaker 05

  But we could see that target of two percent on inflation happen as soon as April. And economists widely anticipating that we'll see a rate cut soon. So maybe next month, maybe the month after.

• 5:00Speaker 04

  Hannah Malone, thanks very much. What's your take, Martin Lewis?

• 5:04Martin Lewis?

  Well, I think the most interesting thing about that is the vote, five in favour of keeping it on hold, four in favour of reducing it. So we know that the momentum, the mood music is to bring interest rates down. The the markets are sort of predicting in a three point two five percent Bank of England base rate by the end of the year. I'm actually surprised four people voted to cut it now. I mean, what was interesting is the all the talk was it wasn't going to move today. But it was quite a fine decision. So obviously, there's still a lot of strength of feeling on the Monetary Policy Committee that interest rates should be coming down. And when that inflation figure drops, and I think we know it's going to, you you know, you always think, how do you know? Well, because because of the lag on the previous year and you've got energy prices that we know that they move ahead because they're on the price cap, the vast majority of people.

• 5:48Martin Lewis?

  We have a pretty good idea that inflation is probably going to shift down somewhat. We don't know exactly how much in the next couple of months. I think this is a delay of a move downwards rather than no move downwards.

• 6:02Speaker 04

  The Winter Olympics, what discipline do you think Martin Lewis would be best at? What would you like to see Martin Lewis do? I mean, after what he's put me through with his flipping mastermind, I'm going straight for either the ski jump or the or the skeleton.

• 6:19Martin Lewis?

  Hold on, hold on, the skeleton and there's luge, which ones, which ones?

• 6:23Speaker 04

  Face down his skeleton.

• 6:25Martin Lewis?

  Yeah, no, I'd, yeah, I prefer luge. If I had to, I'd do luge.

• 6:27Speaker 04

  Well, I'm putting you on the skeleton.

• 6:28Martin Lewis?

  I'd do the skeleton. I mean, I, I already have issues with the Winter Olympics because my co-predenter of my television show, The Wonderful Jeanette Quachy, is, is going to be missing a show to present the Winter Olympics. So, you know, already the Winter Olympics, but I do, I, I love Olympics. Now, I will watch, I'll watch the curling, which, you know, can be very dramatic. I'll watch the downhill skiing. I'll watch, I'm less into some of the acrobatic stuff because I, I'm quite a binary person and I like it where you can measure it by speed or points. I find sports where there's discretionary artistic judgment element, I can never quite work out.

• 6:58Speaker 04

  Oh, like Torville and Dean and all that.

• 6:59Martin Lewis?

  Yeah, well, that was lovely, but again, I, I, I find the discretionary artistic scoring.

• 7:04Speaker 04

  You want data. You just want data.

• 7:06Martin Lewis?

  I just want pure objective data. This person is better than this person because they went down the hill faster than the other and, and swerved around the slaloms. So I find that, I do like watching them, but I'm not as gripped because I think, I think there's a level of subjectivity. I hope I haven't just offended a whole load of them.

• 7:21Speaker 04

  I'm sure you have.

• 7:22Martin Lewis?

  Of course.

• 7:30Speaker 04

  Let's talk about this, you've, you've been writing letters to the Scottish government. What's that about?

• 7:36Martin Lewis?

  Yeah, so I've sent a letter this morning and I, I'm, I wanted to do it here because I'm going to read you the first three paragraphs of the letter.

• 7:41Speaker 04

  Right.

• 7:42Martin Lewis?

  It's to the Cabinet Secretary for Justice and Home Affairs. Dear Cabinet Secretary, I wanted to write to you as we believe people in Scotland are being subserved when they come to use their power of attorney compared to other UK nations. This came to light most obviously on my podcast, September 2025, where listener Margaret told me, in Scotland, why do I always have to get a newly certified copy of the power of attorney as banks won't accept one certified more than six months ago? Why isn't there a code system as in England? On the show was Austin Lafferty, Solicitor and former President of the Law Society of Scotland. He agreed with this situation and is indeed a co-signatory to the letter. So in England, and this is particularly a problem with financial service providers,

• 8:27Martin Lewis?

  you get a code that you Can give them that shows you have the power of attorney, it makes it easy, it makes it swift. We have heard so many different things from people in Scotland who say when they try, when they have power of attorney for somebody else, somebody's lost their faculties, they've taken over, they want to manage their financial details, they're going to financial services providers. And the administrative burden of having to get a brand new certified copy of the power of attorney each time is a nightmare. And they just want to know, can Scotland have the same system as, as England?

• 8:55Speaker 04

  Yeah.

• 8:56Martin Lewis?

  Or as another efficient system, doesn't actually matter. So that's what the letter's about. And I'm a great believer, because you might be thinking, this doesn't sound that big a deal. A lot of the problems I think we have, there are many big legacy things that politicians focus on. You know, they always want to come and do the big stuff. I actually think if we, if we fixed a lot of the small stuff, people would be a lot happier. And this to me is one of those small problems that should just, let's just get it done, let's get it fixed, let's make all those people who are already having to look after somebody else's finances for them in Scotland. Make the system simpler and easier. And I've got, Austin kindly co-signed the letter too, because I'm English. And I didn't feel it was appropriate not to have someone from Scotland signing a letter to the Scottish government. And let's hope we get a good reply and we get some positive action out of it. And it all came from the podcast.

• 9:43Speaker 04

  And I'll ask you about energy standing charges. What's happening there? Weren't we meant to get new tariffs in January?

• 9:49Martin Lewis?

  Yeah. So last July, Ofgem announced there's going to be this new low or no standing charge energy tariff. Now, this frankly came on the back of a suggestion that I made to them. When I realised we were never going to get the standing charge very significantly lowered on the price cap, the price cap is of course the default tariff most people in the country are on, the tariff you're on if you do nothing, the tariff you're on if you fix sentence and you don't do anything, or if you've never switched. I then moved and suggested we have a dual price cap, a price cap with a low or no standing charge and the normal price cap. Now, we need to understand the standing charge, the daily amount that you pay just for having the facility of gas electricity.

• 10:30Martin Lewis?

  Is a moral hazard, it's a poll tax, it disincentivises lower users from cutting their bills, it leaves many especially older people who only turn their gas on in the winter, paying for gas every day in the summer even though they're not using it. And it is by far the biggest single thing that I get complained about on energy bills. So I was delighted back in July when they said this would be launched in January 2026. Check your watch, it's February. Then in September, they said, well, we're not actually going to do what we said we were going to do. We've decided we're just going to get them to offer that they must offer a low or no standing charge alternative tariff, not a price cap tariff. And that will be in early 2026. So let's just talk about what that means.

• 11:12Martin Lewis?

  That means that one of the tariff options that a company has must have a low or no standing charge. So the unit rate would be higher. No one's saying it's overall going to be cheaper, but the way it works out is therefore lower users, if you're only paying a hundred quid a month, you should move to a no standing charge tariff. Now, my problem with that iteration was that half of the point of this was to do it on the price cap. Many of the people who are low users are also vulnerable customers and the type of people who don't switch. The price cap mechanism was set up to be a backstop. It was set up to be there for the people who can't engage in the competitive market so that they at least are not getting paying a terrible price. Unfortunately, it's now become the standard, the default tariff that most people are on, which it shouldn't be.

• 11:57Martin Lewis?

  If you're on the price cap, get off the price cap if you possibly can. But my big problem with that is I wanted the price cap mechanism to default people to whichever of the two price caps were cheapest. What they've done is they've made it to switch as tariffs. So all those vulnerable low users, which is the main reason I was campaigning about this, they don't switch anyway, so they won't get to these tariffs. But even all that now, I mean, this has been diluted more than Vinto in a bath. This is just so weak. We now have nothing. And we asked Ofgem, where is it? What's happening? You said it'd be January, you said it'd be early. This is what Ofgem said. We've heard people's concerns about the standing charge loud and clear and have set out options for change. However, it's right that we carefully consider stakeholder feedback on these proposals and

• 12:42Martin Lewis?

  make sure any changes we make continue to prioritise the best interests of consumers and do not have unintended consequences. In other words, the current situation is.

• 12:53Martin Lewis?

  Tumbleweed. Nothing has happened. And I wanted to do it because we get so many questions about standing charge. So many people saying, where are these charges?

• 13:01Speaker 04

  What's the holdup then? What's going on?

• 13:03Martin Lewis?

  I don't know. I mean, I think, so when they launched the price cap tariff, the energy firms didn't like it. So then they came back with this option of they must do an alternative tariff version. That came back and me, who was one of the loudest voices pushing for this, then said, well, that isn't good enough because it doesn't help vulnerable customers. And they've ended up with a halfway house that no one is that keen on. And therefore, nothing has happened. But this consultation has been out for a year and this isn't a new problem. This is something that should have been fixed. And no or low standing charge options would have been better than nothing. But I would still want some way of how do we get vulnerable customers who are low users onto these low or no standing charge tariffs? So nothing has happened.

• 13:49Speaker 04

  Overpaying on the mortgage then?

• 13:51Martin Lewis?

  Change tone. Yes. Right. So look, the reason we're doing this now is, as I said earlier, interest rates, the UK base rate is likely to come down this year, we think, by probably the markets are predicting another half a percentage points. So from the current 3.75% to 3.25%. And we're likely to see easy access savings rates drop on the back of that. And the rate at which you can fix your savings drop on the back of that. Current top easy access savings about four and a half percent. It won't be that high coming soon. But many people's mortgages, even if UK base rates drop, won't drop because people have fixed. And there are mortgage fixes. Now, some of that will have factored in potential

• 14:34Martin Lewis?

  future drops in fixed rates. So therefore, you've got this question. If you have money in savings, if you have spare money a month, and I know not everybody's lucky enough to have it, but I have to tell you, many people do. Is it better to use that money and put it into a savings account? Or is it better to pay off your mortgage and overpay your mortgage? And that, and I know we've got loads of questions on it, that, that is the core of our discussion today.

• 14:58Speaker 04

  From Marie, I've just over two years left on my mortgage. Do I pay it off now with savings or just carry on until it's done?

• 15:05Martin Lewis?

  Yep, that's.

• 15:05Speaker 04

  I know I'd have to pay an early redemption fee if I want to pay it off early. Part of me thinks I have the savings to clear it if I, if, if I had. So why not just keep my savings earning interest in my ISA? What to do?

• 15:17Martin Lewis?

  So let's just go through the basics here. Step one in should I overpay my mortgage with my savings? Is do you have more expensive card, loan or overdraft debts? If you have more expensive debts, so a higher interest rate debt than your mortgage, I would prioritise clearing those ahead of clearing my mortgage. So that's just a general point. Most people asking us don't have those, but I need to say that. The next thing that we go to is you have to be contrasting the interest rate of your mortgage against the effective after-tax interest rate of your savings. The general rule of thumb is if your mortgage rate is higher than your savings rate, you're better off overpaying the mortgage.

• 16:01Martin Lewis?

  If your savings rate is higher than your mortgage rate, you are better off saving. That's a very rough rule of thumb to start thinking about this. And a simplified example of why. £10,000 saved at 4.5% generates you £450 interest or £360 interest if you're a basic rate taxpayer and effective 3.6%. Yet if you used it to overpay a 6% mortgage, you're saving £600 of interest. So the £10,000 is used to save £600 of interest is better than £10,000 used to gain £450 worth of interest. They're two sides of the same coin.

• 16:38Martin Lewis?

  The best thing to do is go to a mortgage overpayment calculator. There are some great ones online and the good ones will allow you to see not just how much you save by overpaying your mortgage, but let you input a savings rate and see how much the gain of overpaying your mortgage is compared to the gain of saving. Because many mortgage overpayment calculators you just look at and they say, wow, you can save £50,000 over your paying your mortgage, yes, but they miss the opportunity cost. You know, the economics, opportunity cost, what other uses could I have with the money? And for those thinking investing, we'll come to investing later, we'll talk savings at the start. So just to give you some simple examples here. For someone under £200,000 repayment mortgage at 5% with a 25-year term, just to do the

• 17:23Martin Lewis?

  technicals. If you made a one-off £5,000 overpayment, that would save you £12,000 in interest. So £5,000 overpaid saves you £12,000 in interest alone and you clear your mortgage one year and two months earlier. A £200 monthly overpayment would save you £41,880 on a £200 grand mortgage and you would clear your mortgage six years and two months earlier, combine the two and you would save £50,000. So that's one-off overpayment and £200 every month and clear your mortgage seven years earlier. This is a significant factor.

• 18:07Martin Lewis?

  Let me just read you Deb. Hello, wanted to say thank you. This afternoon I redeemed my mortgage 11 years early, thanks to you. They're very kind. Nearly 14 years ago, I was a single mum by my first property. I was pretty feckless when it came to understanding financial terms. Then I read that you advised overpaying a mortgage if possible and happily and fortuitously I've been able to make lump sum payments off over years and now aged 57, I feel I can relax and even contemplate retirement, raising a glass to you and your team. Well, thank you very much, we'll ignore those. Two baboons for you, Adrian, two big butts. Okay, big butt number one.

• 18:44Martin Lewis?

  I would not overpay my mortgage unless I had a cash emergency fund. So I would want three to six months' worth of bills in savings in the eventuality that I had a change of circumstances such as losing your job or something else happening to you. Because the fact you have overpaid your mortgage, you know, let's imagine you've overpaid by 10 grand and suddenly you can't pay. The mortgage company isn't going to go, oh, it's fine. You've overpaid by 10 grand. Don't worry about it. You don't have to pay us for the next year. They're going to say, you owe us the money. You're in arrears. So you need those.

• 19:16Speaker 04

  And you don't really get the benefit until years down the line.

• 19:19Martin Lewis?

  Exactly. So you want to have that cash emergency fund. It's always first priority. And the second thing is you need to check there aren't any payments for any penalties for overpaying. Most mortgages will allow you to overpay penalty free 10% of your outstanding mortgage amount without any penalties. So I go back to your question. She, I think it was a she, she had two years left. And she has got repayment penalties because obviously she's only got a small amount on the mortgage. So 10% of the outstanding amount each year won't be that much. Then it is just a question of doing the maths of the repayment penalties. The the likelihood is in that circumstance, it's only worth overpaying up to the 10%. I can't give you an exact answer because you haven't told me what the interest rates are.

• 20:01Martin Lewis?

  But in that circuit, but for most people, where you've got 20 years left on your mortgage, 10% of your mortgage is a big sum. So you're you're able to overpay quite a decent chunk without it being a problem.

• 20:10Speaker 04

  A success story from Sarah, she said, I've overpaid every month since taking out my mortgage 14 years ago this year. It was a 20 year mortgage and I paid it off last year. So I ended up paying it off seven years early. Now life is a lot easier. I mean, you get, it's about the psychology of it as well as the numbers, isn't it? I mean, who's to know the money she used to overpay? She could have gone and put it on a horse and won a fortune or put it, you know, invested it more wisely and done well.

• 20:37Martin Lewis?

  But you could have done all that, but the the remember, overpaying your mortgage is a risk free way to use your money. You know, it's equivalent to savings. It's not an investing. You're overpaying it. You know what the interest rate is. You've got a defined reduction and we shouldn't underestimate. We talked a couple of weeks ago about a wonderful guy on the Question Time podcast who talked about his debt free day and he was going to be debt free in a week and watch what I do with the money. And it was very moving. But there are also people out there who celebrate their mortgage free day. You know, you've got, in the hierarchy of how free you are, the first one is debt free day. And then the ultimate one is mortgage free day. And that's the day where you say, I have no debt whatsoever. I do not even owe for my house. And those people who are getting mortgage free in their 40s and 50s, because they've been overpaying and they've done it right.

• 21:21Martin Lewis?

  There's a huge financial freedom to not having that sink cost that's coming out of your funds, whether it's rent or a mortgage each month. So that therefore your disposable income is increasing greatly. And in the psychological aspect, that's incredibly beneficial. And it is, that's why we call it free, mortgage free day. You're right, you could earn more money, potentially you could have earned money in hindsight investing. But that mortgage free, risk free, I'm going to get to a point, I have a target to work for. People do find life transformative.

• 21:49Speaker 04

  Monarch wants to know if you'd best to reduce your term or your monthly payment.

• 21:54Martin Lewis?

  Okay, neither.

• 21:56Speaker 04

  Right.

• 21:57Martin Lewis?

  Neither. Okay. I was waiting for this.

• 22:02Martin Lewis?

  The reason you save by overpaying your mortgage is because you clear your mortgage earlier. So you would think that is reducing the term. One of the problems people have when they overpay, so let's tackle the more simple one first. Is that what some lenders do is they automatically reduce your future repayments. So you overpay, I'm making these numbers up, you overpay by £10,000, your current mortgage is £500 a month. And they say, great, your new repayment is £450 a month, over the same term. If you do that, you do not save any money. You do not save money because your interest payment is, the cost of a mortgage is a function of the interest rate and the time. The bigger the interest rate, the longer the time, the more you pay.

• 22:47Martin Lewis?

  So by then reducing your repayments, but keeping the time the same, you're saving a little, but you're not making the big savings. The big savings come from reducing the term. But you heard me say you shouldn't reduce the term. That's because.

• 23:01Martin Lewis?

  If you go to your mortgage and you, your mortgage lender and you say, I've got a 25 year term, I want to reduce it to 20 years, two problems, one, they have to credit score that because you're having to repay harder and two, you've just lost all your flexibility in case something changes in future. So what you need to be doing is making manual overpayments and you make each individual overpayment effectively reduce the term by you paying the same amount. Now, some mortgage lenders will do this for you. So each overpayment sort of moves the term. If they don't, then you keep, so let's just do, let's go back to our £500 mortgage that reduced to £450 and you want to overpay £100 a month, right?

• 23:44Martin Lewis?

  You just give them £600 every month. You know, it was, your original mortgage payment was 500.

• 23:49Speaker 04

  Yeah.

• 23:50Martin Lewis?

  They're reducing it to 450. Forget that. You'll give them £600 every month and even though now you're, you think you're overpaying by 100, they think you're overpaying by 150. Who gives a monkey's?

• 24:00Speaker 04

  Yeah.

• 24:01Martin Lewis?

  It's about keeping your repayments fixed. It's reducing the capital that you owe. That's what saves you the money and that's what you need to do. But if you ask them to reduce the term, then you have, you're putting yourself in a much more difficult position if something changes that you can't overpay in future because you're forcing your future self to overpay. So you want it to sort of move with you as opposed to define the move in advance and define it as a target. Did that make sense?

• 24:25Speaker 04

  Yes. So Jonathan, similar kind of question. Am I better upping the monthly payments or paying a big lump off in one go?

• 24:31Martin Lewis?

  Right. Well, that is very interesting. So there's another big benefit to paying off your mortgage that I'm going to come to in a moment, but let me just try and answer that. Assuming that your lender is reducing the capital on the day that you pay. So the calculation goes on the day that you pay. The soon as you have the money, if you put it in, that reduces quicker. So if you were to, if we make it a long period, I'm going to save up over the year and pay a lump sum off at the end of the year versus I'm going to put exactly the same amount of money in each month to my overpayment, then you are better to overpay each month solely because it becomes more quickly.

• 25:10Martin Lewis?

  As long as that they're reducing the capital on that period. But ultimately, if you're talking, I'll do it every three months, I'll do it. The differences are relatively small. I wouldn't, I wouldn't want to discourage anybody by adding an administrative burden from it. And again, we are assuming that it's right for you. We're assuming that you've got an interest rate that's higher than your mortgage rate.

• 25:32Speaker 04

  Okay.

• 25:33Martin Lewis?

  Sorry, you've got a mortgage rate that's higher than your savings interest rate.

• 25:35Speaker 04

  When is best to start over paying off your mortgage and by how much?

• 25:40Martin Lewis?

  Once you've got a cash emergency fund and as soon as you can afford to, as long as you don't have any other uses for the money and we'll be talking about investment in a little bit on that.

• 25:47Speaker 04

  Janice, we haven't started overpaying yet, second year in, but in three years, we should have a lump sum of 90K. Our rate is 5.6%, quite high.

• 25:56Martin Lewis?

  Yeah.

• 25:56Speaker 04

  This isn't our forever home, so what should we do?

• 26:00Martin Lewis?

  Well, I think when you have that money, if you have a mortgage rate of 5.6%, you cannot earn 5.6% in savings with the exception of a help to save if you're on universal credit or, or a regular saver, you can put a couple of hundred quid a month in. But, but anyway, there is, especially because you're going to be getting a new mortgage. The other really important point here, if your LTV, your loan to value is higher than 60%, in other words, you are borrowing more than 60% of your home's value. Then reducing your loan to value, you're with me? Can improve the mortgage that you're able to get. So mortgage rates tend to improve at 95% loan to value, so that's equivalent to the 5% deposit if you're a first time buyer.

• 26:45Martin Lewis?

  At 90% equivalent to a 10% deposit, at 80%, at 75, 70-ish, 60-ish, and then they don't get any better. So if, even if, let's say you can save at 4.6% and your mortgage is 4.4%.

• 27:02Martin Lewis?

  If your LTV is relatively high, then overpaying the mortgage, whether you do that as a lump sum, once you're ready to get your next mortgage, or whether you do it in the middle, means that when you come to remortgaging, you may well be able to get a lower interest rate on your future mortgage that would save you anyway. That's the other big benefit for those people who don't have that much equity in the house, that you're effectively building equity in your home because you're reducing the mortgage, so you're increasing the gap, and that can be really beneficial when you remortgage. So you have to factor that in. In their case, clearly, your forever home's probably going to be a bigger home. That's the way most people work. You've currently got a 5.6% interest rate. That's pretty high anyway. It looks, that's a pretty good bet for overpaying your mortgage.

• 27:47Speaker 04

  And we're talking about overpaying mortgages?

• 27:49Martin Lewis?

  The basic rule, the rule of thumb, if your mortgage rate is higher than your after-tax rate you can earn on savings, then you're better off to overpay the mortgage. Otherwise, you're better to save. We're not, we're going to come to investment in a moment. The, the interesting thing here, and the point I do need to make, I had someone who got in touch with me. We haven't got a question on the show about this, who had, was asking me, it was actually on Question Time. It was on the Question Time podcast last week, and he was saying, you know, my savings pay 2.5%. My mortgage is at 4%. Clearly, I can earn more. I presume I should be overpaying my mortgage. And my answer was, no, you should be earning more in your savings. Right? So it's, it's important that when you're doing this sum of which works well, and when you're going to your mortgage overpayment calculator, you know, savings are really easy to get a better rate.

• 28:31Martin Lewis?

  If you're on a low rate, you open up a new easy access savings account or a fixed rate account, and you put that rate in. We are talking, comparing the best mortgage you can get against the best savings you can get. If you don't have the best mortgage, get a better mortgage. If you don't have the best savings, get a better savings.

• 28:47Speaker 04

  Don't forget that.

• 28:48Martin Lewis?

  And then do the calculation. So I just wanted to make that little bit of a point, that I'm not saying, look at your current savings. If your current savings are paying 1% and your mortgage is paying 1.5%, that's not a reason for overpaying your mortgage. That's a reason for getting better savings, because you could be earning 4.5% in your savings. So that's the, the sort of caveat to the comparison I was making earlier.

• 29:08Speaker 04

  Maria, you've got a mortgage fixed until March 2027 at 1.26%, which is, which is low.

• 29:14Martin Lewis?

  Very low. That means super cheap. Well done. You know, you, you obviously locked in four or five, three or four years ago on a five-year rate that was super cheap. You've done very well out of it. But let's remember that rate is gonna jump up. I mean, unless something radical happens to interest rates, you're going to be paying substantially more once we get to 2027. So you've got to be prepared for that bill shock. And obviously, reducing the mortgage at that point would be useful.

• 29:38Speaker 04

  Okay, but I think she's talking about reducing now, or

• 29:41Martin Lewis?

  Yeah.

• 29:41Speaker 04

  But her husband is saying we'd better off putting the extra money that he would spend on repaying the mortgage into the S and P 500, so into, you know, blue chip shares, basically.

• 29:53Martin Lewis?

  Yeah. So let's just talk through this. Clearly, with a 1.26% mortgage rate until when in 2027?

• 30:00Speaker 04

  March next year.

• 30:01Martin Lewis?

  Okay, so 14 months. You would absolutely be better putting that money in high-interest savings.

• 30:11Speaker 04

  The money you would use to pay off, you mean?

• 30:13Martin Lewis?

  Your money, putting that money in high-interest savings for now, because you can earn four and a half percent. And it's only costing you 1.26%. So then the first easy option is put it in high-interest savings. Well, you could even get a one-year fix because it's just over a year, but make sure at the point you're remortgaging and you're going to have a new, more expensive mortgage, you have that cash is liquid, that cash is available to you, so you could use it to overpay the mortgage if you wanted.

• 30:46Martin Lewis?

  Investing is a more difficult question. The general rule on investing, and I need to state I'm not a regulated investment advisor, but the general rule on investing is investing is good if you're putting money you don't need away for the longer term. Now, that means you are having to make this decision based on an uncertainty. The uncertainty is, we don't know what your mortgage rate will be in 2027.

• 31:13Martin Lewis?

  Right.

• 31:14Speaker 04

  We know it's going to be worse.

• 31:16Martin Lewis?

  We assume it's going to be worse. We don't know whether it's going to be really, really a lot worse. We don't know what's going to change between now and then. Now, if you put your money in investing, the problem with investing over the short term is markets go up and down and up and down and up and down and up and down. And if you would need to crystallize it at the point, at a certain point regardless, you could be crystallizing on a down, not crystallizing on an up. And that's why generally the rule is you're investing for over five years. So you have a real uncertainty issue here. The first question, in your case, it's not should I invest or pay off the mortgage? The question is, should I be saving for the next year then overpaying the mortgage? Or should I be investing over five or six years? And there's an uncertainty element. Now, the rate of the mortgage makes a difference here too.

• 32:00Martin Lewis?

  Because this is all about opportunity cost. There was a person earlier who had a 5.6% mortgage. Well, actually, because there is no risk premium on a 5.6% mortgage, overpaying a 5.6% mortgage gives you 5% 6% guaranteed returns. How much would you want to hope to be making? I'm going to ask you this, not as an investor, but as how much would you want to hope to be making before it was worth not clearing with no risk 5.6%? You wouldn't want 5.6% in investments because that's a risk. So it's got to be, got to be more, hasn't it?

• 32:31Speaker 04

  Yeah, yeah. Well, you'd be thinking of seven or eight or whatever.

• 32:34Martin Lewis?

  Exactly. So that's where it gets more difficult. And that's where I can't give you an answer. This becomes a question on your attitude to risk. If this question was, I have a 1.25% mortgage fixed for the next five or 10 years. And you're saying, I'm thinking of investing it in a broad spread of investments that, you know, shares my assets. Then I understand the risk that I'm taking and all the other caveats that we need to do when we talk about this. I think that, that has a level of being quite sensible and could well be what pays you best in the long run. Right? Because investing over the long period works. But because of the uncertainty element in this question of we don't know what your mortgage rate will be, we don't know if mortgage rates will jump to 7%, I mean, I think it's unlikely.

• 33:18Martin Lewis?

  But in April next year, there's a much bigger risk factor in investing here. Because if you're talking, actually, I'm going to need that money in 14 months, then then that's where investing becomes a lot more difficult. So I think in the nature of this question, me, I'm not telling you what to do, this is a regulated area. Me, as a risk averse person, I would be saving and overpaying my mortgage at that point because I don't know what's coming. Someone who's who's less risk averse would be investing. But if you were talking over the long period, overpaying your mortgage versus savings, well, it depends on what's going to happen to mortgage rates. If you've got a very cheap mortgage, well, investing rather than than overpaying could well be a winner.

• 33:55Speaker 04

  Okay, Pricey is paying an extra £200 a month and a lump sum when he can, but he got a letter saying that they're reducing his minimum payment per month. Can they do that?

• 34:05Martin Lewis?

  Yeah, and and it's really frustrating when lenders do this. Just keep overpaying, keep your repayments, including your overpayment, what they are. This is what we talked about earlier. Your repayments are 500, they're reducing it to 400, you're paying 700 anyway, let them reduce it to 400.

• 34:19Speaker 04

  It doesn't mean you have to.

• 34:20Martin Lewis?

  Keep paying 700.

• 34:21Speaker 04

  Yeah.

• 34:21Martin Lewis?

  Right, that's how you and say that you want this to go on to the capital reductions. We we've actually written in the past on to the regulator saying that we mortgage lenders should be forced to allow you the option of reducing the capital and and keeping your repayments up. I mean, it's a behavioural thing from them because the longer you're borrowing for, the more interest they make.

• 34:39Speaker 04

  Somebody says, if I can afford £600 a month over 20 years, should I take a mortgage that's £500 over 25 years and pay £500 and £100 overpayment a year to pay direct to the brick rather than interest?

• 34:57Martin Lewis?

  If I'm understanding this right, and it may not be, then they're saying, I can afford 600 quid, but should I get a mortgage spread over a slightly long period at 500 pounds and overpay?

• 35:08Speaker 04

  Yeah.

• 35:09Martin Lewis?

  Well, the advantage of that, as long as you will definitely overpay, the advantage of that is you give yourself some flexibility in case of change of circumstance. But you just have to check that you're going to be able to qualify for the same rate and that they've done the same risk assessments. And there's a lot of, you know, keteris paribus in this question, all other things remaining equal that needs to make it work. Speak to your mortgage broker. By the way, with mortgages, it's a very easy route. Go and speak to a good mortgage broker to see that you're getting the cheapest mortgage when you're doing this. And talk to them about this if you're confused. That's what they're there for.

• 35:38Speaker 04

  Sonia, overpaying by £1,200 a month, taking seven years off the term. It's a psychological thing for me to be debt free. I just, you know, I get that.

• 35:46Martin Lewis?

  Yeah, totally. Debt free, risk free, in your sense. And yes, you might have done better investing. You probably want to done better saving, but you might almost certainly not. But you might have done better investing, but that lack of guarantee, we are a risk averse nation. I think is something that's very powerful to people's psychology.

• 36:05Speaker 04

  Dom, seven years left on an interest only at 2.5%.

• 36:09Martin Lewis?

  Okay.

• 36:10Speaker 04

  Is the only answer to pay the minimum and invest the overpayment, i.e. the money you've used for the overpayment, to help to pay off the principal in seven years' time?

• 36:22Martin Lewis?

  That is, it depends whether, people use the term invest and they sometimes mean saving and they sometimes mean invest.

• 36:29Speaker 04

  Grow, I think, yeah.

• 36:30Martin Lewis?

  Yeah, grow. Certainly savings, you can guarantee you can earn more in savings right now than you can overpaying. Investment will generally, in the long run, I've said this before, but I just need to be really clear, will out overperform savings over the long run, but there is no guarantee. So that is on your attitude to risk in those cases. But yes, overpaying a 2.5% interest only mortgage, as long as you're not going to touch the money elsewhere, in general, you'd be better putting the money elsewhere. I mean, there is, if you're on universal credit and therefore having bigger savings could reduce your universal credit, there are always ifs and buts, but big picture here.

• 37:04Speaker 04

  I think Beverley is asked about offset mortgage savings account, which, as I had always understood, it was basically like your mortgage was effectively a giant overdraft on your bank account.

• 37:16Martin Lewis?

  Yeah, that's so. The idea of an offset mortgage is all your money goes in and is temporarily overpaying while you have it. And then when you take it out, it reduces your overpayments. So it reduces the amount that you owe on your mortgage debt. Conceptually brilliant, works incredibly well, and they are available. But.

• 37:36Speaker 04

  I love doing this. The way you go with your index finger, and I know it's coming, but, and as the word, you look performing, I see the finger coming up. But.

• 37:49Martin Lewis?

  But I'm trying to do clear communication of something complex. So the but is what is the interest rate? Right? So let's, we're gonna do, I'm gonna do an absurd example to make it really clear. If you have a 3% mortgage that you can't do offsetting on, compared to a 6% mortgage that you can offset, you're gonna need to have to offset, I have a lot of your savings to reduce the amount of your mortgage to make it worthwhile. So because offset mortgages tend, speak to your mortgage broker, to come at a premium that you pay more for an offset mortgage,

• 38:29Martin Lewis?

  you need to be keeping a lot of your money, you need to have a very substantial chunk of your mortgage offsetting it. You know, tens, hundreds of thousands of pounds in there to make it worth the extra premium you're paying in the interest rate for the offset mortgage. So conceptually, everything else being equal, offset mortgages are great, but everything isn't equal, the interest rates aren't equal, and therefore it takes a calculation. And if you're just gonna be putting, you know, if all you're doing is you haven't got any spare money, you earn £3,000 a month, right, you've got a £300,000 mortgage and all you're doing is effectively using the offset mortgage to put that £3,000 in over a month, but then you'll spend it, so it's an average 1,500 quid you're putting in over a month, and you're paying an extra one percentage point interest rate to do that, it's gonna cost you a fortune.

• 39:14Martin Lewis?

  Right? If you've got 200 grand of savings that you don't want to properly overpay your mortgage and lock it away because you might want it in future, but you think you probably won't want it for the next 12 years, and you're putting that in your offset mortgage, then paying the higher rate might work for you. That, that was me but, and I think it was a nice but.

• 39:31Speaker 04

  It was a nice but.

• 39:32Martin Lewis?

  You know, and I like big buts.

• 39:37Martin Lewis?

  The tellers, what money rule do you follow now that you once thought was pointless or over the top? What have you got?

• 39:43Speaker 04

  Ricky, pay myself first. I used to think saving small amounts was a waste of time. What's the point of £10? Then a tyre went, a bill landed early and I didn't have that horrible stomach drop panic. Boring habit, less stress actually works.

• 39:56Martin Lewis?

  I like the phrase paying myself first. I think that's a really good psychological way to think about it Ricky, good for you. Michelle, this one got a lot of likes, lot of likes on social. Pay into a private pension as soon as you start to work. It seems like a lifetime away and when you're in your late teens, early twenties, but it's gone in a flash by the time you hit 50s and realise. Quite right, remember auto enrolment starts at the age of 22, but if you're 18 or older and you earn over roughly six and a half grand, while you're not automatically enrolled into your workplace pension, you can choose to opt in and if you opt in, the company still has to give you the matching, semi matching contributions, i.e. you put 5% of your salary and they put 3%. And if you're living at home with your parents and you're 18 to 21 and you've got no other

• 40:39Martin Lewis?

  expenditure, you're probably going to find you have more disposable income than at other points in your life if you're working, so you might want to do that.

• 40:45Speaker 04

  Andy, now I'm approaching 60, I don't spend it until I've got it. In the past, I've always been, why wait if there's a way to get it now? Well, I suppose as you get older, it should be the other way around in a way, you should be thinking, well, I can't take it with me.

• 40:59Martin Lewis?

  I think it's just about, so I think 60, it's about getting sensible, isn't it? I mean, ultimately, if you, debt and savings, I mentioned this with mortgages earlier, but let's go really clear, debt and savings, two sides of the same coin. Debt is where you pay for something each month, debt is where you buy something, then you pay for something each month after you've bought it, plus you have to pay interest on top. Saving is where you pay for something each month before you've bought it, they give you interest and then you buy it. They're the same thing in reverse, but in one you're getting the interest and the other you're paying the interest.

• 41:28Speaker 04

  A spreadsheet with a clear budget for income outgoing or savings, keeping track of what financial situation I'm in, has helped me turn my finances around, staggers me to think I thought it was funny people did it and I just spent as I pleased.

• 41:41Martin Lewis?

  You know, these are the, I always talk about my job is not to make people be tight, my job is to help them utilise their money in a way that gives them maximum happiness. And while it sounds weird that a spreadsheet and taking that time, people, once you have surety of understanding where your finances are, it is a much more relaxing way to live if you can get yourself there. I'll let you read the next one because it's sort of about me, so it feels weird for me to read it.

• 42:02Speaker 04

  Okay, after about five years of reading, you say, you say every January sales. If you weren't going to buy it and you don't need it, then it's not a saving. Saved a fortune not buying things I don't need.

• 42:15Martin Lewis?

  Absolutely.

• 42:15Speaker 04

  You've got to count to ten with everything you buy, particularly Amazon and all the rest of it.

• 42:19Martin Lewis?

  Or go back the next day, or actually think about it, I'll tell you a story in a moment because it's funny. But my mantra I do on my Black Friday mantra is quite simple. If something is 50% off and you were planning to buy it anyway, well done, you saved 50%. If something is 50% off and you're only buying it because it's discounted, you've just wasted 100%. And that's sort of the way to think, but I'll just tell you this story, my friend, one of my oldest and bestest friends, I won't mention her name because she says this didn't happen, she denies it, but it did happen, right, years and years ago, before I was married, she was one of my mates I used to go and hang out with, and we were in a shop and there were two pairs of black boots, Adrian. And to my eyes, these two pair of black boots were absolutely identical, but to her eyes they weren't.

• 43:03Martin Lewis?

  One cost 60 quid, one cost 110 quid, and she was sitting thinking about it, and I'm sitting there going, and I said, all right, look, this is the actual decision you made. And I got money out of my pocket and I held up the 110 pound pair of boots.

• 43:14Speaker 04

  Yeah.

• 43:14Martin Lewis?

  And I held up the 60 pound pair of boots. And I had 50 quid in my hand as well.

• 43:19Speaker 04

  Yeah.

• 43:20Martin Lewis?

  Right, and I said, this is the actual decision you're making, 110 pounds or the 60 pound pair of boots and 50 quid. And she said to me, wow, I've never thought of it that way before. That's, that's really fascinating. And she stood there with her mouth open, went, thank you so much, and bought the £110.

• 43:42Speaker 04

  I mean, I, I had one where somebody pointed out to me that I was going.

• 43:47Martin Lewis?

  And it is true, and you know who you are, and it is true.

• 43:49Speaker 04

  But I was going a long way to save £10 on a bottle of twen- on a £20 bottle of wine. So instead of getting it for £20, getting it for £10. I was putting myself out. A person I was with said to me, but would you make the same effort for you were buying a car for £5,000 and you got £10 off it? And you go, well, no, of course I wouldn't, because it's like, but it's, it's the same £10.

• 44:13Martin Lewis?

  It is, except you, you buy, I suspect you buy a bottle of wine more frequently than you buy a car.

• 44:18Speaker 04

  Yes, but it's worth, you know, £10 is £10.

• 44:20Martin Lewis?

  £10 is £10, but listen, there are a whole many psychological things about money when we go into there. I mean, this is why, one of the great ways that people make profit over the years on lots of PPI was this, travel insurance for on package holidays was this for many years. It's called the annual need. So, and I remember, I, I used to, I mean, the reason I, I wrote about it in my book, which I'm not trying to sell because it was years ago. My very first job, my very, one of my very first jobs was selling caravan awnings, right? So they were the attachment for the caravan.

• 44:48Speaker 04

  Yeah.

• 44:49Martin Lewis?

  Right, and I worked in this caravan park and I was taught this sales technique, this annual need sales technique, which is, which is basically, someone would be buying this 1,500 quid caravan awning, right? And you'd, you'd sell them the caravan awning and it'd be a big decision, you'd have, what's the frame size? And you'd go through everything that involved and, and you would take, you know, you'd be, it'd be an hour that you were there selling it. And then after you finished that, what I was taught to do that worked so effectively, I'd go, oh, and you'll need a floor mat? And they'd go, yeah, yeah, yeah. And the floor mat that was a hundred quid for the awning, but the profit was in the floor mat, less in the awning. But they know, there was no thought to the floor mat because all the emotion was in buying the awning, because that was the big purchase. Travel insurance on package holidays, oh, you'll need, they sell you, you just spent

• 45:33Martin Lewis?

  half an hour, an hour deciding on the holiday, you've decided on the holiday and they go, oh, you need insurance, so you go, yeah. But you're getting a loan, you know, your fully insured loan, oh, you'll need insurance, yeah, yeah, yeah, yeah. All the profit's on the ancillary, not on the main. And, and we're, we're very not logical about that. It's exactly what, what you're talking about. It's the idea of, I've focused on the big thing so much, I don't have the brain capacity to think about the secondary thing.

• 45:54Speaker 04

  Yeah.

• 45:55Martin Lewis?

  Speaking of brain capacity, play the theme tune. I like that.

• 46:00Speaker 04

  Every week I try and sort of filibuster this and just say I'm keeping talking so it forgets.

• 46:06Martin Lewis?

  Adrian, welcome to Money Mastermind. The score stands at 15 right and 32 wrong in this three option multiple choice quiz, which means you're

• 46:22Martin Lewis?

  no better than random chance. In fact, far worse than random chance. We need a new FWTRC sting. You have got all four wrong this year. And because of that, I wanted to go easy on you. But I don't know how to do it. I don't have that in me. So I took 10 of the Money Mastermind formats from the past, put them into a large language AI on the back of our AI chat in last week's show with the following prompt. Role: Martin Lewis, producing a single Money Mastermind segment for Adrian Charles on the radio. Inputs: I have shared example Mastermind questions that use a short, relatable, humorous scenario as setup, a multiple choice question designed to teach a consumer money point, a punchy factual takeaway. Task: Create one

• 47:07Martin Lewis?

  new Mastermind question that mirrors the structure and tone of the examples. Source requirements: base facts and advice primarily on Money Saving Expert guidance. There you go. So that was the AI prompt I gave it.

• 47:20Speaker 04

  I'd rather have you written all that, couldn't you have just written the question? But anyway, great idea.

• 47:23Martin Lewis?

  Actually, to be honest, I write it in a short sentence and I ask it to write the prompt for me and then give it the prompt. And my big, my big AI tip, if you're designing an image or something, don't write your image description and then ask it to do it. Write your image description and then ask it to write a prompt for how you would ask the image generator in the same to do it. And that works much better. But that's the whole, anyway, a Mastermind. Written by AI. Now Adrian, picture the scene. You're abroad, somewhere European, somewhere with cobblestones, strong opinions about lunch and a quiet disdain for British tourists. You've done your prep, you've packed the socks and tutted at the exchange rate. And crucially, you've got your G-hit card in your wallet.

• 48:06Martin Lewis?

  Disaster strikes, you slip, twist something important and end up needing medical treatment. At this point, Adrian, you lean back, wince theatrically and say the fateful words, it's fine, I've got a G hic. AI didn't add the accent, I did it all by myself. So here's the question. With a valige G hic or E hic, what are you actually entitled to if you need healthcare while temporarily away in an EU country? Is the correct answer? I think this is too easy, I would have made it harder.

• 48:34Speaker 04

  Oh, don't say it.

• 48:35Martin Lewis?

  A, all medically necessary treatment on the same basis as a local resident, so if you pay, they pay. B, completely free healthcare for anything that goes wrong during your trip. C, emergency treatment only and nothing else. Now, I need to note, you can't do your usual of trying to second guess what I would have done and what I'm trying to set you up because I did not write the question. So A, all medically necessary treatment at the same price as a local to pay. B, completely free healthcare for anything that goes wrong during your trip. C, emergency treatment only.

• 49:05Speaker 04

  Oh, God, I should know this, it's something else I don't know, I just don't know.

• 49:11Martin Lewis?

  Come on, think it through.

• 49:13Speaker 04

  Well, I would, well, the first one.

• 49:16Martin Lewis?

  The first one is all medically necessary treatment on the same basis as a local. So if a local pays, you pay. If a local gets it free, you get it free. The second one is completely free healthcare for anything that goes wrong during the trip. And the third one is emergency treatment only and nothing else.

• 49:29Speaker 04

  I'd say it's either the first one or the third one.

• 49:32Martin Lewis?

  I think that's a pretty, that's a pretty, I mean, the middle one, the middle one is a very clue I would never have written. Completely free healthcare for anything that goes wrong during the trip. It's not specific, what goes wrong, what counts as going wrong. So, so I'm going to give it you as your friend, it's not B, and that is a clue that you would never have had, that AI failed on that clue. But so A and C, emergency treatment only.

• 49:54Speaker 04

  What would I expect? I'm just trying to think, it's what I would expect. If I was doing it, I would expect to, let's go for having the same as a local.

• 50:06Martin Lewis?

  All medically necessary treatment on the same basis as a local resident, so if you pay, they pay. So you're saying A, final answer?

• 50:12Speaker 04

  Yeah.

• 50:13Martin Lewis?

  Play the hallelujah.

• 50:22Martin Lewis?

  Yeah, and that is what a GIC or an EIC does, the Global Health Insurance Card, which doesn't have that many more countries than a European Health Insurance Card. But anyway, that was a bit of Brexit spin that came out on the back of it. It's simply a card that says you get treatment like a local. That can mean going to a GP, it can mean going anywhere. Sometimes they will struggle to accept it, but effectively it's a reciprocal arrangement. It means we can use their health service and they can use ours when they come here the same way as if you were a local person there. Make sure you've got a valid up-to-date one, lots are out of date, and never pay for it. It's always free, there are scammers out there trying to charge you. Shysters out there, don't pay for your GIC or EIC. But if you're going to Europe, get yourself one.

• 50:59Martin Lewis?

  So I've finished the bit in the studio with Adrian and I've moved into a separate studio, Studio 6C, for those of you who are interested, I know isn't that excited. And joining me virtually down the line is podcast producer Simon, who's back from paternity leave. PPS, how are you doing, fella?

• 51:13Speaker 06

  I'm absolutely brilliant, delighted to be back. Been a long time. The last time I was on air with you, I still believed England were going to win the Ashes. That's how long ago it was.

• 51:23Martin Lewis?

  And how foolish you were.

• 51:25Speaker 06

  It's that kind of naivety that means that you're the expert and I'm not.

• 51:28Martin Lewis?

  We've won in Sri Lanka since, at least.

• 51:30Speaker 06

  Yes, yeah, yeah, yeah.

• 51:31Martin Lewis?

  Anyway.

• 51:32Speaker 06

  And because I've been on, I've now got two children under the age of three, so the only reading I do these days are Julia Donaldson books. So we'll see what, how that impacts the kind of tempo with which I read out things like Tellers going forward.

• 51:44Martin Lewis?

  Although, just thinking, with children that age, that was probably not bad for the Ashes. When you were up in the middle of the night, you could at least put something on to watch.

• 51:51Speaker 06

  Well, so I bought a subscription to the broadcaster for the exact reason, and I gallantly said to my wife, no, no, I will do the night time feeds. And there weren't quite as many days play as I was hoping, if I'm honest. So yeah, I'd factored in things would go beyond the second day a bit more often than they did.

• 52:08Martin Lewis?

  Well, it's very nice to have you back, fella. Simon, I think we've got one question less on overpaying your mortgage that we didn't cover. Shall we do that one quickly?

• 52:14Speaker 06

  Yeah, so Harriet got in touch, she wants to know if someone had an interest-free credit card, a mortgage and a student loan, which would you advise overpaying first?

• 52:23Martin Lewis?

  That is an impossible question to answer without more detail. So I'll try and talk you through each one in turn. Of course... We don't know the mortgage rate and as I've been saying all along, if you can earn more in savings than your mortgage rate is costing you, you're better to save. So whether you'd overpay the mortgage or not is really dependent on whether you've still got one of those super cheap 1%, 2% mortgages from four or five years ago, or you're at a current standard variable rate at 7%. The higher the interest rate, the more likely you should be overpaying the mortgage. The student loan question, I'm afraid, is even trickier because there are five plans of student loans and I don't know which one. Both the postgraduate loan and the Plan Two loans have,

• 53:07Martin Lewis?

  for some people, above inflation interest rates added. But the interest rate that is added is not the same as the interest that you pay. That depends whether you clear the debt before it wipes. Otherwise, it works more like a graduate tax. Go and have a listen on that one to the podcast I put out last week. That was specifically about Plan Two overpayments, but it gives you a concept of whether you should overpay those. That is, you know, that's a whole 20 minutes in its own right. Now, let's do the 0% credit card. Well, look, if you have a credit card at 0%, it's not costing you any interest. So you would be better on a purely technical, tactical basis to keep that money in a savings account. And that's what we call stewzing.

• 53:50Martin Lewis?

  Stewzing is where you deliberately artificially make a 0% credit card debt so you can earn interest on the money that's on it by saving it. There's lots of ways to do that. I'm not going to go into detail now. But it's only for people who are savvy and really careful. The issue with the 0% card is what happens when it ends? The rate will jump to about 25%. So will you be able to get another 0% card? Will there be a fee for doing so? Now, in a perfect world... So let's imagine that you have quite a high interest mortgage, say 5%. We're going to ignore student loan debt. It's just a whole other subject. Got a high interest mortgage at 5% and you can borrow money on credit cards at 0%. Well, back in the noughties, when stewzing used to be slightly easier and we used to talk about it more because there were less fees involved in balance transferring and stuff like that.

• 54:34Martin Lewis?

  There were people who stewed pots, that's the total amount of money that you're stewing, were getting into, there was one person I remember got up to about 80,000 pounds. So they had 80,000 pounds of artificial 0% debt on a credit card. Artificial, because they didn't actually have the borrowing, they just took it out and then had that lump sum available. But they then put in their offset mortgage, and you've just heard us talking about offset mortgages with Adrian. So they had 80 grand of 0% credit card debt sitting in their offset mortgage, saving them 6% interest on their mortgage. So, you know, about five grand a year interest saved by this artificial nature of stewing. So those who are incredibly savvy, understand what they're doing and know the risks, can utilise 0% debt to reduce their mortgage.

• 55:19Martin Lewis?

  But that is not something the vast majority of you should be doing. If you're sitting there going, "I don't understand", or you're going, "I'm not sure that's for me", or "it's a bit risky", you're quite right, don't do it. Far better just clear the mortgage and clear the credit card. But for those who really know how to play the system, then it can work that way. But as I say, the risk is you won't be able to get future 0% borrowing, so you always need access to cash to be able to pay off the credit card at the point the 0% ends, just in case, which an offset mortgage did give that person, just in case you can't get another 0% deal. So, overall, my guess is it's probably pay off the mortgage first, but have money available to make sure that you can clear the credit card within the 0% period. I think that answered it.

• 56:02Speaker 06

  Perfect.

• 56:02Martin Lewis?

  Did you understand?

• 56:03Speaker 06

  Yes.

• 56:04Martin Lewis?

  Good. For you. Right, shall we do a few more tellers before we finish?

• 56:08Speaker 06

  Yes. Shall I go first? Karen, in full. Spent too much of my youth overspending on my credit cards and only paying the minimum payment. Then I listen to you.

• 56:19Martin Lewis?

  Ah, well, that's good. I'm very pleased to hear about it. Well done, Karen. Do you know what? Simon just walked in. I'm very lucky, I have a special guest in the studio with me. Right?

• 56:29Speaker 06

  Yeah.

• 56:29Martin Lewis?

  Which is actually Lara, Mrs Money Saving Expert, who happened to be in the building and has brought in to say hello.

• 56:34Speaker 06

  Finally, a broadcaster who knows what they're doing.

• 56:36Speaker 02

  Hello. I have literally popped in to say hello. I thought I was going to remain a mystery guest, which would have sounded more exciting.

• 56:41Martin Lewis?

  But I think, shall we get her to read us tellers?

• 56:43Speaker 06

  Yes.

• 56:43Martin Lewis?

  As a special pod-only thing.

• 56:45Speaker 06

  Yeah, yeah, 100%. Okay, so the rule, if you can't afford to buy it, you shouldn't contemplate borrowing for it. The only exception is buying a house.

• 56:53Speaker 07

  Ha, I thought, what rubbish. What changed my mind was looking at the total expenditure for a car I decided to borrow for. Whoops.

• 57:01Martin Lewis?

  There you go. So yeah, another classic example, people just don't understand the real cost of borrowing. And when you're borrowing anything, if you possibly can, you can't do it on a credit card, but you can do it on a loan, you need to look at what are you borrowing? And what is the total repayment over the period? And when you realise the excess of cost for expensive borrowing, it really makes a difference. Simon, do you want to do the next one?

• 57:20Speaker 06

  Yeah, well, this one doesn't really apply to me. I obviously look good in everything, but Kim.

• 57:24Martin Lewis?

  Oh, sorry, the Kim one. I definitely need Laura to hear this. All right. This is actually quite an interesting one.

• 57:30Speaker 06

  Kim says, I had my colour and style analysis done when I was around 40, and I have never wasted money on clothes that I won't wear. Everything I buy suits me perfectly. Nothing sits in my wardrobe unworn. Shopping is super easy and efficient. I also buy nearly all my clothes from charity shops and online pre-love sites.

• 57:48Martin Lewis?

  I think that's fascinating. I mean, I would never have thought of having a colour and style analysis done, so you don't waste money on clothes.

• 57:54Speaker 06

  You can't tell.

• 57:55Martin Lewis?

  I suppose it's, thank you very much. What, and so, but clearly, Simon, I've seen how you dress, so you can't talk either. But we had, Laura, you probably have a better take on this than I do.

• 58:04Speaker 07

  Well, I have a lovely new colleague this week called Charlotte, and Charlotte used ChatGPT, obviously you could use Gemini or another, to input a photo of herself and ask what colour she should be wearing. I thought this was a really interesting use of AI, because I wouldn't have thought of even asking it as a question of anybody or any AI.

• 58:23Martin Lewis?

  Funnily enough, if you don't know, Laura, my wife, is a tech journalist. No wonder she mentions AI at the first thought.

• 58:30Martin Lewis?

  I suppose ultimately, it's simply a question of buying the right thing. If you buy the right thing that lasts longer and you're going to get more use out of, you have a greater utility and therefore you save money on the back of it. Kim, you've opened up our eyes. Maybe, Simon, we should consider doing something more on that in future. I think it's really interesting. Let's do our last couple now.

• 58:48Speaker 06

  Credit cards are evil schemes for banks and for the few people who can use them without paying interest to profit off, or debt slaves. I learned this by seeing the impact of credit cards on my family and friends and by looking at FCA data, I would make the promotion of credit cards illegal.

• 59:03Martin Lewis?

  Yeah, except the problem, we've just talked about one advantage of 0% cards and also cards used right. You know, if you spend on a credit card, you pay it off in full every month and you get rewards or you get, you know, it can be the cheapest way to spend overseas and you also get section 75 protection that you don't get anywhere else. Credit cards are the best way to spend, they're just a bad way to borrow in general. And I think it's about neutering the ability of the card to borrow, which is where I would go. So I'm not quite sure 100% agree with Peter. Let's do a final one now. Chris, don't feel guilty about enjoying spending the money on yourself that you've worked hard your whole life for. At 62 and now in early retirement, my policy is to enjoy now the money I've saved as in

• 59:47Martin Lewis?

  another 15 or 20 years, I might not be able to or wish to enjoy the things or visit the places I want to now. And I absolutely agree, funnily enough. I think money is about utility and happiness. You need to plan and be prepared for the worst to happen and have the contingencies available. But actually, spending wisely, checking that you're doing things efficiently, not wasting money on things that don't give you happiness or value, or at least getting the things that you need and the necessities, not joyful things, as cheaply as possible than the way that it works, is what enables you to spend the money on the things that you want to to give you a better life. And that seems a lovely way to finish.

• 1:00:26Martin Lewis?

  That's it for this week. We tend to put out a new episode every Thursday and Monday, which is our Question Time podcast, where you can ask me absolutely anything and everything, open brackets within reason, close brackets. So if you've got a question, send it to [email protected]. And if you've enjoyed today's pod, please tell your friends you've been listening to the Martin Lewis podcast. And why not subscribe? Then your pockets will be pleased with you. And if you haven't enjoyed the podcast, but you're still listening right now at the very end, well, I think that's more of a question for you than for me. I mean, seriously, you've got an off switch, you could have pressed it.

• 1:01:21Speaker 07

  Martin Lewis is the founder of MoneySavingExpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing [email protected]. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.

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• 1:03:12Speaker 00

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  Listen to The Haunted Library wherever you get your podcasts, or find us on YouTube.