Quandry

moghtyshark

The 5% fixed rate interest only period on my £23,500 mortgage has just come to an end, leaving just 5 years to go at the new lower (variable) rate of 1.79 over the BoE. The drop in payments is quite nice although I am aware it may go up at anytime. That said, I don’t think (or hope) that is could it go as high, or higher, in such a short time before the whole arrangement finishes.

The end of the fixed rate period also coincided with the end of an (underperforming) endowment and I have just been presented with a £17,000 cheque.

My dilemma is do I overpay the mortgage with the £17k thus reducing the £23,500 but letting it line the coffers of A & L/Santander or do I hold on to it, trying to invest it wisely for the remaining 5 years I have left before I am obliged to find the whole £23,500?

I have a few weeks before I have to make a decision but am turning myself inside out with AERs, ISAs, Bonds and the vast array of savings account to hand. What’s the general concensus reckon?
Lee

Thrugelmir

Why not switch you mortgage onto a repayment basis for the remainder of the term? This would minimise the impact of any future interest rate rises.

As you need the money to repay your mortgage. I would keep your investments liquid and not tie it into investments that could flutuate in value. One option could be to put some of the money into a cash ISA utilising this years allowance and next years. Then if rates were to rise suddenly you could withdraw the funds and reduce your mortgage immediately.

dimbo61

You dont say if you would pay any ERC,s if you paid a lump sum off the mortgage!
Now if it was me I would put £5100 into a cash ISA and hope to get 3% tax free this year then another £5100 next april.
Pay the rest off the mortgage and then put the figures ( what you still owe) into "whatsthecost" to work out how much you need to pay each month to clear the mortgage in 5 years.
Emergency fund in ISA,s and mortgage free in 5 years