Help with mortgage calculation please

gardenia101

Hi - I'm hoping someone with a better brain than mine can help.

I should be able to pay off my mortgage next month but have been advised that it may be better financially to invest while the base rate is so low, but I'm ashamed to say I can't get my head around the maths.

Mortgage of £97,000, £30000 of which is interest only, on a lifetime tracker of base rate + 0.54%. Only had mortgage for 3.5 years, so not huge amount paid off capital yet (if anything).

I can get short term fixed rate around 3% (don't want to fix for too long) & while I can do the basic maths I can't work out how to "account" for my monthly repayment of £248 - would I be better off repaying the mortgage as I'd also then save this monthly repayment?

Thanks

originalmiscellany

gardenia101 can I ask you a silly question please?
You say you've had a mortgage for 3.5 years, but you've got enough to pay off the mortgage (in full I assume) next month? So do you have 97k savings? I just want to check in case of a typo, I don't think there is, but wanted to clarify.

gardenia101

originalmiscellany wrote: »

gardenia101 can I ask you a silly question please?
You say you've had a mortgage for 3.5 years, but you've got enough to pay off the mortgage (in full I assume) next month? So do you have 97k savings? I just want to check in case of a typo, I don't think there is, but wanted to clarify.

Yes I will have just over £100K coming to me from an inheritance later this month/next month.

I've had a medical condition flare up so am unable to work for up to a few years depending on medical treatment, so I'm trying to cut my monthly outgoings so paying off the mortgage would help a lot. A more financially savvy friend tried to explain to me that I should make use of my low rate (base rate + 0.54%) & make money on the debt while rates are so low, but I lost him after after a few minutes!

I don't have any other debts & have maxed my cash ISA this year.

Any ideas anyone? Thanks.

dimbo61

We know very little about you and your family ? Income,kids, type of property and if this is your forever home or you cant wait to move!
If you are on benefits then when the cheque for £100K drops on your doormat you need to tell them !
If you are allowed I would keep £16K in emergency savings and clear the rest off the mortgage and the £248 you would then be saving would go into investments But thats only my opinion GOOD LUCK.
Consider what the person who left you the money would have wanted you to do with this once in a life time lump sum

gardenia101

dimbo61 wrote: »

We know very little about you and your family ? Income,kids, type of property and if this is your forever home or you cant wait to move!
If you are on benefits then when the cheque for £100K drops on your doormat you need to tell them !
If you are allowed I would keep £16K in emergency savings and clear the rest off the mortgage and the £248 you would then be saving would go into investments But thats only my opinion GOOD LUCK.
Consider what the person who left you the money would have wanted you to do with this once in a life time lump sum

Thanks for the reply - I don't get any benefits except for Employment Support Allowance Contributory (which isn't means tested & I get because until this flare up I've always worked) & Disability Living Allowance (low rate) which again isn't means tested.

I have 2 kids so get child benefit & child tax credits. Amazingly this inheritance won't count as income (just the interest from the capital) for tax credits purposes (which I think is mad, but thats a whole other discussion!).

I'm single, so get the standard 25% reduction in council tax, but I've always had just too much in savings to get council tax benefit (which is fine, I don't expect it, just trying to give a clear picture of my situation).

Not sure about moving, but probably won't as kids settled in school & I'm near to the hospital.

I realise I'm incredibly lucky to have this money & my instinct has always been to pay off any debt. But I need to plan for the worst (in that I may never work again if my treatment doesn't work) so wonder what the figures might be if I didn't pay off the mortage but invested instead. I'd always choose low risk investments & am disciplined enough not to dip into it as I'd always pay it off if rates rose.

Just can't do the maths....:o

Dimbo61 - my relative would probably have spent the lot travelling & having fun but I'm hoping I'm a bit more grown up than he was!

dimbo61

The only way for interest rates is up and if it was me I would clear the mortgage and not have that worry any more but I hang out on the Mortgage Free board most of the time!
Building up savings will be much easier with an extra £248 a month to invest.
As you have other savings make sure you fill your ISA allowance first then save in regular savers