Pay morgage off - investments - current state of things etc?

ADB100

A bit of a stab in the dark here and don't flame me for not searching too deep....

I am currently on a fixed rate mortgate until september 2011 (5.19%). I have a fair amount of cash in a reasonably high interest account (although the rates on that have decreased considerably over the past year). I could pay a substantial amount of the mortgage off with the funds in this account. I can currently meet all my outgoings fairly easily but I feel I could be better at managing my finances. I don't have any ISA's, however I was talked into a 3-year investment deal by a financial adviser from my bank last year before it all went pear-shaped. There is no point in me touching this investment before the 3-years are up as I will definitely loose out (it looked good at the time so don't tell me, I know...). After the 3-years at the least I will get back what I put in.

Now I think you are all going to tell me to pay a chunk of the mortgage off and reduce the debt but I am unsure? I also have a 'Accident, Sickness & Unemployment' policy on the mortgage which is costing me £46 a month which I am unsure I should be paying or not?

Please be gentle with me :rolleyes:

pixiepie99

First of all, it's up to you if you pay insurance or not. It's probably worth your while to see if you could get a better deal on it.

As for your savings, you could invest £3,600 in an ISA before 4th April and another £3,600 after the 4th. Personally, I'd use the rest to overpay your mortgage with.

Sounds like you should read some of the articles on here to reduce your outgoings if you don't feel that you manage your money particularly well.

ADB100

pixiepie99 wrote: »

Sounds like you should read some of the articles on here to reduce your outgoings if you don't feel that you manage your money particularly well.

Yep, that's why I asked.....

pixiepie99

ADB100 wrote: »

Yep, that's why I asked.....

Sorry, you mean you want us to direct you to particular articles on here that might help? All of them probably but to get you started:

overpaying your mortgage: http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings
choosing an ISA: http://www.moneysavingexpert.com/savings/best-cash-isa

I think you need to state more clearly what your question is if you want more specific advice.

Robert_Sterling_3

Paying off some of your mortgage is often a good idea.
Do the sums and see if it is a good idea for you too.

feisty1

[quote=pixiepie99;18524527] Personally, I'd use the rest to overpay your mortgage with. .[/quote]

ADB100........Be careful of this suggestion, you have stated you have a fixed rate mortgage which means overpayment in each yr will be restricted......u don't want to end up being penalised............

pixiepie99

feisty1 wrote: »

ADB100........Be careful of this suggestion, you have stated you have a fixed rate mortgage which means overpayment in each yr will be restricted......u don't want to end up being penalised............

Sorry, yes you're quite right.

I read "I could pay a substantial amount of the mortgage off with the funds in this account" and assumed ADB100 had checked their restrictions but on a fixed rate mortgage there is likely to be a limit to overpayments and exceeding these could incur an early repayment charge.

Probably best calling up your bank to check how much you can overpay without incurring charges if you want to go down this route!

ADB100

pixiepie99 wrote: »

Sorry, yes you're quite right.

I read "I could pay a substantial amount of the mortgage off with the funds in this account" and assumed ADB100 had checked their restrictions but on a fixed rate mortgage there is likely to be a limit to overpayments and exceeding these could incur an early repayment charge.

Probably best calling up your bank to check how much you can overpay without incurring charges if you want to go down this route!

There are no yearly restrictions, only a final redemption one should the whole amount be paid off before the end of the fixed-rate term. I don' have enough to pay it all off - maybe 2/3 of it? I am just unsure whether this removes my flexibility for general 'stuff'?
For example if I wish to move? I think the value of the house is not much more than I paid for it 5-years ago, plus it probably needs a bit of work doing before I could sell it, so is it wise to have the cash in the house or readily available in the bank?
My partner is keen on children and having the extra cash might be handy? (it sounds pretty callous but there is the possibility we may just call it a day as well and then there is the cost of carving things up?)

I know it's a bit vague, but having a substantial amount of cash readily available has always appealed to me - just in case. However so far I haven't had any need to use big amounts of it.

I was just after peoples opinions really?