Lump sum or overpayments? Repayment mortgage

hairyfairy_2

Hello! I'm new here - please forgive my total lack of knowledge!

We have 17 years left of a "flexible" Intelligent Finance repayment mortgage - outstanding balance of circa £42,000.

We have savings of around £25,000 (in Smile mini-ISAs) and want to know what the most sensible and cost effective thing to do with them.

Should I (a) put the whole lot onto the mortgage as a lump sum?
Or (b) increase the monthly repayments?

We can't get our heads around the reduction in term - vs- overall savings thing - and which is best.



As this is a so-called flexible mortgage -can we get the money back at a later date if so required? Would there be any catches to this as far as anyone knows?

Also - does anyone know the actual formula used to calculate mortgage repayments?

Sorry for the multitude of questions - and sorry for being a bit dim!

Cheers

HairyFairy

Joe_Bloggs

@Hairyfairy
Welcome to the forum. I was once an Intelligent Finance mortgagee when nobody else would touch me. What interest rate are IF charging ? What rate are Smile ISAs giving you ? What term do you want for your mortgage ? These numbers tend to influence financial calculations as does existing debt and the interest rates on it.
Regards J_B.

hairyfairy_2

What interest rate are IF charging ? 5.7%
What rate are Smile ISAs giving you ? 4.65%
What term do you want for your mortgage ? 17 yrs

rickw_2

I have a similar question which I would welcome some advice on. I have started drawing a small £300 per month pension and am in a position to add another £200 per month to it. I am not sure whether it would be best to over pay my 107k 14year mortgage by £500 per month or save it and pay off a lump sum each year. I am currently with the Woolwhich with an openplan flexible mortgage. However, the way they seem to handle monthly overpayments is odd. They call these pre payments ( they show on statments as credits) and subtract these as a total once per year from your balance. They then recalulate the monthly payment and adjust the direct debit. This means that my statement always shows the remaining contracted term remaining not the actual given the overpayments.. I do not want to reduce payments I want to reduce the term. Talking to teh call center they inplied I have to request this in writing
I gues at the very least I should change to a SO instead of a DD this way I control what I pay.