What to do with £20000

Moulden71

Hi,

Can anyone help with the pro's and con's of overpaying my mortgage,

Here we go - i have a 5yr fixed mortgage at 4.95 with nationwide which ends in April 2010 i will then go onto BMR (2.5) for remainder of term which ends 2019, in February 2010 i will be getting £20000 which i am thinking of overpaying my mortgage with but after reading other forums some are saying it may be better to save the £20000,i just dont know what to do for the best,in April 2010 i will still owe £80000 on my mortgage and i would like to pay of my mortgage before 2019,its not every day you get £20000 so i just want to use it the best i can.

Thanks,

Simon.

Jonbvn

You should first ensure you have savings worth 3-6 months income to cover unexpected events.

There are no savings accounts that pay (net) above your present mortgage interest rate of 4.95%. However, the are several that pay (net) more than the SVR 2.5% rate, particularly if you tie the money up for a few years.

Overall, I would say save the money, but in this case the difference is quite marginal.

pawlala

IMHO If you can't get a savings rate higher than your BMR then it would be better spent on OP the mortgage. Having said that, I would keep at least 6 months salary worth of it for emergencies, in case you need some easy to get at cash. If you already have savings for this then my honest opinion would be to reduce the mortgage to a nice round 60K.

Moulden71

Hi,

Thanks for the reply's, just one more question if i was to overpay with the £20000 how long will / should it knock of my mortgage term?

Thanks,

Simon.

pawlala

Get in touch with your lender and they will tell you in an instant

Moulden71

Will Do,
thanks Pawlala

Simon.

Jonbvn

Moulden71 wrote: »

Hi,

Thanks for the reply's, just one more question if i was to overpay with the £20000 how long will / should it knock of my mortgage term?

Thanks,

Simon.

You can either reduce the term or reduce the monthly payment.

Lynn11

Whilst you are fixed with nationwide until April 2010 you can overpay £500 extra over your normal payments as a overpayment. So you could use part of the money every month to do this and then pay the reminder of the money in May 2010 cause if you go onto their varible rate there is unlimited overpayments allowed.

I have a flexible mortgage with nationwide and fixed until 2012 and pay roughly £250 extra as a overpayment.

Hope this helps you