Pay off a £76k mortgage or save/invest for 4 years?

stevwarn

Thank you all for your advice; given that no one has recommended paying the ERC, I will wait the 4 yrs and hope the savings interest rate goes up.:)

Is there any occasion in the next 4 yrs when I should pay off the mortgage i.e. if my wife starts working?

dimbo61

As you can put £5100 each into cash ISA,s and other 2/3year savings vehicles should earn you 3.5/4% at least I would still keep the money in savings and enjoy having a good savings pot to fall back on.
IS YOUR JOB SAFE ?
IF not then clearing the mortgage with your savings and taking the hit on the ERC might have to be considered!
Very surprised that you can not reduce your mortgage to say 5 years ( please call the mortgage centre and ask to have it in writing that you cannot reduce the term) I paid £50 to change my term from 22 years to 10 years!

stevwarn

dimbo61 wrote: »

As you can put £5100 each into cash ISA,s and other 2/3year savings vehicles should earn you 3.5/4% at least I would still keep the money in savings and enjoy having a good savings pot to fall back on.
IS YOUR JOB SAFE ?
IF not then clearing the mortgage with your savings and taking the hit on the ERC might have to be considered!
Very surprised that you can not reduce your mortgage to say 5 years ( please call the mortgage centre and ask to have it in writing that you cannot reduce the term) I paid £50 to change my term from 22 years to 10 years!

Thanks Dimbo61,

As far as I know my job is safe but even in the worst case I would have enough redundancy money to pay off my mortgage.

HSBC would reduce the term but if I over-payed and payed the mortgage off before the end of the fixed rate I would incur ERC. So I didn't see the point.

alfiesmum

If the ERC is a percentage of your overpayment, then it would be good to reduce the term because the remaining balance (ie the overpayment you need to make) would be getting reduced by the regular monthly payments anyway, without incurring a charge. So the ERC woould be a little less to have to pay.

stevwarn

Given that the RPI inflation is currently at 4.7% and the best saving rate is 2.9%. From my calculations it would appear that I should pay off the mortgage (currently £72000) and the ERC is £2293. I have no other debts and I have 6 mths worth of emergency savings to cover all my outgoings. Please can anyone advise me regarding paying off the mortgage and paying the ERC or sitting tight?