Wait or pay?

cats_123

I'm hoping to pay off a sizeable part of my mortgage this week. is there any merit in waiting until Bank of England base rates fall this week? (It's a repayment mortgage)

Haycorns_2

can't see any point in waiting - your mortgage clocks up interest every day (presumably).The sooner you pay the more you save, assuming your interest is calculated daily and you have no redemption penalties.

cats_123

many thanks...no penalties, so pay off looks imminent

opinions4u

Depends on the rate you're paying.

Birmingham Mdshires are doing a 6.4% FIXED account that allows withdrawals (no additional deposits) - that's 5.12% net.

http://www.askbm.co.uk/savings/t/easy/product.asp?id=206

IF you're mortgage rate is less than 5.12% (and you pay tax at the basic rate) then this account could actually make you a profit - especially if mortgage rates continue to fall.

e.g. mortgage rate of 5% costs £500 a year for £10k; savings account earns £512 = £12 profit. Not a lot, but for every 0.5% fall in mortgage rates, the gain increases by £50 if available for the full year and you have your money liquid.

If interest rates don't fall, or even rise, withdraw and pay off debt!

Might not be right for you - but do the sums, have a thought and make a decision!

koexelek

opinions4u wrote: »

Depends on the rate you're paying.

Birmingham Mdshires are doing a 6.4% FIXED account that allows withdrawals (no additional deposits) - that's 5.12% net.

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Unless you are a higher rate taxpayer of course, in which case it is 3.84% net

opinions4u

koexelek wrote: »

Unless you are a higher rate taxpayer of course, in which case it is 3.84% net

Indeed.

Which is why I stated rather clearly:

"IF you're mortgage rate is less than 5.12% (and you pay tax at the basic rate) then this account could actually make you a profit - especially if mortgage rates continue to fall."