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    • Goldenarms_
    • By Goldenarms_ 10th Oct 16, 9:41 AM
    • 7Posts
    • 0Thanks
    Mortgage help - should I complete
    • #1
    • 10th Oct 16, 9:41 AM
    Mortgage help - should I complete 10th Oct 16 at 9:41 AM
    After a recent insurance pay out we're in a position to pay off our mortgage but I don't know if it's worth it yet with the fees involved.

    When I log on to our mortgage providers website it says our balance is £97800. And that is over another 26 years roughly.

    We took the mortgage out in 2015 and fixed the payments for 5 years at an interest rate of 2.89%, so what I understand is there will always be higher fees to complete within that fixed rate period.

    I contacted the bank last week and the figure they gave me to complete was £103,628.

    So I'm wondering is it best to bite the bullet and pay that extra £6k?

    Or would it make more financial sense to make overpayments until 2020 and then complete? We can pay 10% of the mortgage value each year in over payments.
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    • chelseablue
    • By chelseablue 10th Oct 16, 9:47 AM
    • 1,809 Posts
    • 2,275 Thanks
    • #2
    • 10th Oct 16, 9:47 AM
    • #2
    • 10th Oct 16, 9:47 AM
    If it was me I wouldn't want to hand over £6k to the bank (they already get enough mortgage interest out of me!)

    I would overpay and clear in 2020, it'll come round quick enough we're already nearly in 2017
    Baby Boy born May 2014

    Mortgage starting balance Feb 2016 £231,294
    Savings £11,500

    Save 12k in 2016 Challenge - Member #36
    • Canary_Yellow
    • By Canary_Yellow 10th Oct 16, 10:19 AM
    • 29 Posts
    • 4 Thanks
    • #3
    • 10th Oct 16, 10:19 AM
    • #3
    • 10th Oct 16, 10:19 AM
    How much interest would you be paying between now and the end of the fixed term, assuming you over paid as much as you are allowed?

    How much interest would you earn on the cash you've got assuming the above?

    Do you end up with a net cost that is more or less than the early termination fee?

    My guess would be that you will probably be paying more than the £6k early termination fee in interest over that period, and you won't be earning a huge amount of interest income given current rates. If that's the case, I'd repay now.

    Worth checking if the early termination fee has steps (i.e. x% until 2017 and y% after that etc) if you haven't already.
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