Lump sum - do I pay it off mortgage or remortgage??

Fabs72

I currently have a £115000 mortgage at a fixed rate of 5.98% on my property. I have 14 months left on the fixed rate term but have decided to sell. I’m buying a property for less than I’m selling so I should have about £50000 equity at the end of my transaction and I’m unsure of what to do.
Do I
a) Pay the £50,000 lump sum off my mortgage, incur an £800 fee from the lender and stay at the current 5.98% rate for 14 months and then remortgage
b) Remortgage now, paying a £1700 early repayment charge to the current lender and get a new lower fixed rate deal elsewhere
c) Stick the £50,000 away and continue paying the current mortgage for the remaining 14 months and then remortgage for a lower amount in 2010.
Any advice would be much appreciated

Robert_Sterling_3

If you pay £800 and reduce your mortgage by £50,000 you will save about £3,000 per annum for 14 month in interest charges.
So in 14 months you save £3,500

So from the £3,500 subtract £800 to get £2,700

But if you had the £50,000 in savings at about 3.5% for 14 months
you would get rather more than £2000 in interest for 14 months

So the gain would actually be £700.

Also consider that you do not necessarily want to use the whole of the £50,000 in this way.

dimbo61

Your current £115,000 mortgage is on your current property and if you sell you will have to redeem the mortgage and pay the ERC charge of £1700.
I dont think the mortgage company will let you transfer the mortgage to the new cheaper home because there will be a higher LTV ( ie new property say £130,000 mortgage £115,000 therefore LTV 90%)
If you do sell your property then you will have a good deposit of £50,000 to put down and hopefully get a 3.99% five year fix with A&L,HSBC,ABBEY !
Savings rates are mostly below 4% after tax so better to put down a good deposit to get a good LTV 75%/65%/60% !!