Advice on mortgage and savings please.

Matthew25_uk

Hello everyone,

I'm after some advice please regarding my mortgage and savings, finances etc.

Okay, I have approx £13k in savings and have a £700 per month mortgage, I took the mortgage (£115k) out in August 2006 and at that time i thought taking a 5% fixed rate for 5 years was wise.... maybe not so today. Half of the £13k is in an ISA account and i have already filled up allowance for this tax year. One day i may use this money to start up my own business but not sure what doing yet.

My income is approx £2300 nett per month in my bank but my job is not entirely secure and in the next 6-7 months I expect that there will be redundancies.

Can anyone provide some advise as what is best to do with my savings/income? Should i keep this for a rainy day or try pay some off the mortgage? I dont have any other debts eg credit cards etc in fact i dont have a credit card as i've always lived by "if you cant afford it then you dont have it". I have a nice car which has no money due on it.

I pay mortgage and bills with partner and need to pay each approx £1000 per month for mortgage, bills and living. From my wage (at the moment) I can probably comfortably save £1000 per month.

I would be grateful for any advice anyone can offer please. Someone mentioned different savings accounts etc.

Regards

Matt

anselld

Have you thought about the possibility of remortgaging? Need to do careful sums but there are rates like 3.39% on offer from First Direct which would reduce your outgoings to nearer £475, maybe less if the rates go down next week. Question is what are the exit terms of your fix? This might protect you by making outgoings more affordable.

Undoubtedly the alternative of paying off mortgage is beneficial, but it depends how you vie the redundancy risk, your prospects of getting a new job if the worst happens and how much payout you would get. It might be best to keep a cash reserveif you are seriously worried about those factors.

withnell

Remember that anything you pay off on the mortgage it's unlikely that you'll be able to get back in an increased mortgage any time soon.

Also note that if your ISA rate is over the 5% mortgage rate then you're financially better off leaving it in the ISA!

Matthew25_uk

Thanks for your replies, its much appreciated.

Our morgage at the minute is approx £695 per month and was taken out with Skipton in August 2006 at a 5 year fixed rate of 5.09%.

I have just checked the annual summary statement and it says early repayment charges are £3350 + £125 early redemption fee. So does this mean i would have to pay £3500 to get out of this mortgage early? and say if i got another mortgage at £495 per month i would be saving approx £200 per month x 12 months = £2400, so on this basis it would take me approx 18 months to pay off the fee?

Thanks for your help.

Regards
Matt

P.S. my ISA is also with Skipton and last time i checked (while ago) rate was at 4.5% ish, not sure what it is now.

I have my salary paid into a normal Barclays current account with rubbish/no interest is there anything clever or other accounts i could set up to get better interest?