Have funds to pay off Mortgage...Should I ?

jimbo1958

Have just inherited £50,000 which I'm going to put in my A&L online savings account. Will then get some ISA's for myself and my wife, before deciding what else to do with the balance.

I really would like to pay this off my mortgage purely for peace of mind and not have it hanging over my head.
I have 2yrs and 7mnths left.
It's fixed rate at 4.9% with an early repayment charge of £492.
I currently pay £302 a month.

My idea is to pay off the mortgage and pay the £302 a month into my online savings account for 2yrs and 7mnths. The online saver pays 5.15%.

Would welcome any comments............I'm a complete newbie to saving so any advice would be greatly appreciated.

TIA.

jimbo1958

Any opinions anyone ???

TIA

woollyjumper

The experts always say pay off your debts..

Work out the simple maths -

You haven't stated your mortgage pay off value so guessing - the fee is £492...
So you will be paying interest on the amount owed for another 31 months.

302 x 31 months = £9362

If the final value if you pay now is less than £9392 - £492 = £8900
Also you will save on the mortgage life assurance (not much I know - but the pennies add up).

You are better off ... don't forget the online save will be taxable
so not 5.15% less 22% tax (or even 40% tax) - will be less than your mortgage rate of 4.9%.

Not an expert but just my thoughts on the matter.

darktrader

Pay off your mortgage.

Not even any need to do the maths. It's a psychological boost to be mortgage-free.

Just make sure that whatever money was being paid out in interest is paid into savings or investments. You won't notice it as you were used to paying the money out.

I have my monthly savings/investments spread between share ISA, Additional Pension contributions and a cash ISA.

For detailed advice on savings/investments seek professional advice. I personally use an IFA that I've know for 15 years.

jimbo1958

Many thanks for taking the time out to answer guys.
I've just phoned the Halifax to send me out a settlement final figure and hopefully I'll be mortgage free at the age of 47 in a few weeks.....yipeeeee.

Thanks Again. :beer:

missile

If your provider will allow overpayment then you could pay off all but £1 and thus reduce your mortgage paymnets to next to nothing but avoid the early repayment charge