Any Advice Please?

MoneySaver1979

Hi Forum Members,

I am looking for some 'simple' advice. I am mathematically challenged so anyone who can say do A), or C) I would appreciate their input. Currently I have a 5 Year Fixed Repayment mortgage. I am in my 2nd year of this term on a rate of 5.63%. I will round the figures off but they are very close to what I am playing. My outstanding mortgage is £100,000 and I have 19 years left on the plan. Here is my question, I have saved (a long time) and saved £12,000. If I pay this into my mortgage in one go they would charge me £300. I can however make overpayments per month up to £500. My question is should I drip feed in the £500 over 24 months (2 years) or take the hit on the £300. The interest on my mortgage is charged daily if that makes a difference.

Thank you in advance,
MoneySaver1979

silvercar

It will partly depend on what interest rate you are getting elsewhere on your £12k savings, but I would think that £300 is a price worth paying.

£6k @ 5.63% for two years is £675.60. Drip feeding £12000 over 2 years is roughly equivalent of paying £6000 at the start of 2 years as that would be the everage amount paid in over the 2 years.

Paying 12k off at the beginning would gain you 12k @ 5.63% x 2 = 1351.20 less £300 charge = 1051.20 BUT this takes no account of the interest you get on your savings wherever they are currently stored.

MoneySaver1979

Thank you for taking the time to reply SilverCar. I hate the fact at having to swallow losing £300 in the interest of 'Saving Money' but it looks like the way forward. I have had a look at savings but looking at the Savings v Paying off mortgage guide I would need to be earning 9.4% on my savings and I cant find any savings at this figure.

Thanks once again,
MoneySaver1979

lukekelly_2

Paying it all in immediately is better, even with a £300 fee. I would not recommend putting all your savings into the mortgage though, keep some aside and easily accessible just in case.

MoneySaver1979

Thank you LukeKelly,

Appreciated and noted. I have put additional savings in my Instant ISA's for the rainy days ahead ... ... and it's bloody pouring ... ...