Pay £20,000 of mortgage or put in Savings/Isa

jimmyc_2009

Hi all im in abit of a pickle at the moment basically my mortgage has been at 0.5% as i was one of the lucky ones on a tracker before the base rates fell so been paying very little for the past 2 years and managed to save £20,000 in that time its going to come to an end at the end of april then im going back onto chelsea's variable rate which is currently 5.79% ,now would it be wise to pay £20,000 of the mortgage or put it into savings or ISA's?My mortgage is interest only and i only put down 5% deposit on my house but this would bring me up to 80% LTV mortgage if i paid £20,000 off it plus im only 23 year old.Just not sure what to do?

Peelerfart

Strewth, that's a long sentence !

Joe_Bloggs

You may have to use the majority of your savings to secure a better rate for your mortgage. Chelsea members are trying to merge with the Yorkshire Building Society. Who knows what the members of the Yorkshire Building Society think about that ?

Loan to Value is the key. If you have it then you can get the best mortgage rates.
Credit ratings have never been as important as today, see MSE Martin's article. Check your files before applying anywhere else.
J_B.

dimbo61

Well with an Interest rate of 5.79% you wont get this from any savings account or ISA
If you did pay this £20,000 off the mortgage you could then look around for a better deal but you need to consider fees to change lenders!
Do Chelsea have any good deals with your new LTV
IE 5 year fix at 4.94% LTV 75% fee £995( on there website)

marklv

It depends on what your top priorities are. Only you can decide this.

jimmyc_2009

I was looking at the post office one 5 year fix @ 5.35% @ 80% LTV but only £599 arrangment fee but i get £200 off it because i work for royal mail so bonus there and free valuation and free legal stuff to change over the mortgage to them.If i choose these how does the valuation work in that its free so if i find my house does not reach the 80% LTV mark do i have to pay them for the valuation they did or something also if my valuation is only out be £2000 say could i get a loan to cover this or will that go against them accepting my remortgage?

talana

jimmyc_2009 wrote: »

....its going to come to an end at the end of april.........

Ok, so no need to make any hasty decisions right now.

- investigate what mortgage offers may be available to you with a better LTV
- is this £20k your whole savings pot? Keeping some sort of cash fund in the bank might be advisable.