A good problem to have

ice2cu

In about 2 months i will inherit £50,000 but i know its stupid but i do not know what to do !!!
I have a mortgage for £85,000 fixed at 5.64% for another 2 years there is a £2300 penalty to come out of it, i can (and do) overpay by £550 a month do IPay a one off 5.64% penalty on everything i pay over this (£564 per £10,000 )
I am going to top up our isas and keep a bit in reserve and will have £35,000 left over what do i do ???
I will pay £1974 if i just top up the mortgage , the same as the intrest i would pay in a year
£2300 to come out and can get a lower % rate as well
Or just carry on over paying and invest at about 3.5% and pay a lump sum of in 2 years
Any advice
Sorry for the CAPs on first version

rb10

You could buy a keyboard that lets you turn off Caps Lock - it's very difficult to read a message written entirely in capitals.

Annisele

About the capitals...when posting on online forums, using capitals means you're SHOUTING and people tend to consider it rude (unless you have a very good reason to SHOUT). So, you tend to get more helpful responses without the caps lock

About your actual question...you need to work out the consequences of your various choices.

So, for example, each additional £1 you reduce your mortgage by will cost you £1.0564 immediately, and will save you £0.1128 in interest over the next two years. However, it will also cost you the interest that you would otherwise have received on your £1.

I'd check with your bank about the overpayment penalty - it's possible that it isn't 5.64% for the whole of the next two years.

ice2cu

Sorry about the CAPs
The over payment charge is a one off on any payment over the £550 so I would pay this only at the time of the overpayment. Thanks for your help

jimjames

Is there a maximum number of £550 overpayments you can make? You could overpay £500 per month for example (thats the limit with my Nationwide mortgage)

ice2cu

Hi there is no limit or penalty to the £550 payments as long as not more than that in any month.