Mortgage help

Mark_Cooper

Hi, I have had some money left me by my dad.
I have enough to pay off my mortgage but the bank are going to charge about £800 to pay it of, I think its because we have a fixed rate. Would I be better putting my money in a bank account to make some interest, I know it won't be a lot. I need an account that will let me have a direct debit from it to pay the monthly amount...hope that makes sense.

CloudCuckooLand

Your fixed deal will have an early repayment charge, the £800 presumably. Just put the money somewhere safe, that earns a bit of interest for a while, then when the fixed deal ends, pay off your mortgage.

dimbo61

Its important to give us the information! we need
1 Interest rate you are on and how long you have left on the fix !
2 What kind of interest rate you could get from savings accounts !
3 what are the charges to clear the mortgage? and will you have to pay some fees after the fix ends

Mark_Cooper

1 Interest rate you are on and how long you have left on the fix !

5.79% got another 4 years on fixed rate. was a 10 year fixed.

2 What kind of interest rate you could get from savings accounts !

interest on savings account at the moment. 0.01%

3 what are the charges to clear the mortgage? and will you have to pay some fees after the fix ends

Charges are £800 altogether.

Mark_Cooper

sorry we owe £23000
just looked the fixed rate finishes 31/8/ 12 thought it was longer than that.

beecher2

sounds like it would be worth clearing it - but make sure you look at your savings in general. If you pay it off and are saving the amount which previously went to your mortgage, make sure you open ISAs and look for the best savings deals.

Mark_Cooper

Hi Beecher2, the thing that is bugging me is we had the mortgage fixed for 10 years, after 2 years mortgage rates dropped, I know thats the chance you take, but we have paid over the odds for years. now the want £800 to pay it off, I begrudge paying it, what I wanted to do is put it in an account to make a small amount of interest and have the direct debit taken out of that account, just can't find an account that pays anything at the moment.

beecher2

You have to work out if you'd make more interest in saving the money than you would by continuing to pay your debt. Otherwise you're just paying out more interest than you need to be. Overpay as much as you're allowed to anyway - probably only a couple of thousand.

Have a look in the savings article here http://www.moneysavingexpert.com/savings/savings-accounts-best-interest for help in picking a savings account if you do so - probably best not to dip into it for mortgage payments though as the best accounts will penalise you for withdrawing money.

herbiesjp

There may be a penalty fee to clear outright - but you may be able to make a capital overpayment (normally 10% of the outstanding balance) without incurring any penalty fee.

So you could be saving a little bit that way. And then another 10% next year, and then clear it.

Mark_Cooper

Thanks guys, I think we are going to put it in a current account with the best interest rate until next year when fixed rate is finished
thanks for the imput.
Cheers
Mark

dimbo61

Mark I dont know which bank you are with but Lloydstsb do a current account where you can put upto £7K in and earn a good rate of interest.
I think you can open a couple of these accounts and wait for the fix to end