From 5.11 years to 2 years >>gone?? 23 July 2006 at 7:09PM in Mortgage-free wannabe 9 replies 1.5K views

minimizer

One month later and still no wiser. Thank to all who answered my thread last time [6 year left].

After reading the other threads and advise kindly received on my last thread outing.

What would you do?

Mortgage remaining: £33,603.61
Term: 5 years 11 months
Expected interest charge over term is £6,717 approx.

I have an ISA pot of approx £20K recently tfr over to A & L as recommended by Martin. - Earning 4.70%

Question:confused:

Should I pay the ISA pot over to the mortgage company? [Cooperative Bank]
current interest charge 6.39% Std variable rate.
Current payments £563/month. [could afford an extra £100.month?]

My simple idea was to pay over £20K. [two ISA pots 1=£8K]
Then take out a loan with "MoneyBank" [again one of Martin's main website "best inprotected loans" providers. @ 5.6%? for the balance.
Thus the Moanybank loan would give me fixed loan repayment of £478/month of over 2 years.

OR

Dream? /Ambition: Use the £20K towards holiday/ rental property in spain.

Am I barking up the right tree?

I have missed something?

Would very grateful for any piggy wisdom.:T :j





[
Original Mortgage £55,000.00
Current £33,306.61
4 years ago re-mortgaged form an 18 year term to 10 year and increased payments by £150.00/mth[/CENTER]

Gingham_Ribbon

Sorry, it's late and I'm tired. I just want to check what you mean.

You want the holiday home either way, but you're checking whether it would be best to borrow the money and use your ISA towards your mortgage, or if it would be better to use your ISA to pay for the holiday home?

alecpr

You have £33K debt charging intrest at 6.3%
You have savings of 20K earning intrest at 4.7%

Paying the 20K off your mortgage will save you 1.6% per year, which equates to £1920 over 6 years (not compounded, so a little more).

From a purely mathamatical point of view you should pay the mortagage, but how much do you value the cash in the bank and how sure are you about purchasing the holiday home?

Have you thought about remortmaging in order to get a cheaper rate or getting a flexible mortgage where you can offset your savings against you mortgage which will allow you to keep the cash and have 20K of your mortagage intrest free.

You could feed the money back in to the ISA as you pay off the mortgage or possibly even transfer the ISA wrapper in to the mortagage.

minimizer

Yeh now that I've re-read my thread it is a little confusing.

Question is? Should I use the ISA Pot to clear the mortgage. property in Spain a dream!

minimizer

Thank you for advice. Some of the opions you have mentioned I had not though about. Having been made redundant once the ISA pot has always been my comfort blanket should life hit one in the face. The temptation to clear the mortgage is very strong.

The property purchase is an option but would involve more debt, but hopefully with some rental income to offset the mortgage.

Once again thank you for your advice.

gentlepurr

minimizer,

i'm like you, i like to have a bit of security in the bank. but on the other hand, £20000 is alot of money to have earning alot less interest than your mortgage, just for the sake of having a security blanket. i think if i was in your shoes, i would pay some of it off (for me, prob £12-15,000) and keep the rest in the isa. overpaying £100 a month, as you said you can do, will then be paying a larger chunk of your capital off than it was before.

hth, and good luck!

xx

Dr.Shoe_2

Personally, I'd put the £20k into the mortgage, a cheap loan over 2 years (or even 18 months?) to pay off the rest then look at a holiday home.

Have you thought of Romania? There are some gorgeous properties going right by the Black Sea for silly money!

minimizer

Tks Gentlepurr, your ideas are along the same track as mine. The MoneyBank alias Alliance & Leicester is giving loans away at 5.6%. Yipee.

Tks again

minimizer

Tks Dr. Shoe. With advise like that you must be a real doctor!!

Again £20k offset is what my Brain is telling me. Holiday home in Romania even better. But having looked on a property web-site, do I buy a 4 bed property close to the beach for £18K??????

I'll keep you posted and thank you for your time and advise. I'll have to see if there are any chat forums for Romanian property purchases.

Rebob

I, myself, would pay off the mortgage but keep about 5k in the bank (just in case). Saving for the holiday home can be done quickly if you have no mortgage and you would be more secure that way.