Should I Become Mortgage Free

jgd12345

Hi, i'm new here and mortgages really aern't my expertise. I have recently come into a rather large amount of money and can afford to pay off my mortgage. However i'm wondering if this is the right thing to do.

From my research is is my understanding that if i fix my mortgage for 2 years with a 3% interest rate (after tax). Then the money i could have used to pay off the mortgage i could put in a fixed term saving account which returns a higher interest rate (after tax) and i would be better off. Please correct me if i'm wrong.

My final problem is that when i was initially sold my mortgage the adviser drew up some graph showing initially i would be paying off mainly interest. I just accepted this at the time and have noticed that although i've had my mortgage for 3 years the actual amount i still owe has come down nowhere near the amount i have paid. This backs up what he told me but what i don't get is that if i move my mortgage to another provider then i'll be paying less money to them than my previous provider.

I'd really appreciate it if someone could clear these issues up for me. Thanks

LJDavis

May have misunderstood but my take is as follows:

Assume you have $100k left outstanding on Mortgage, and $100k amount of money...

To fix mortgage at 3% means that if it were interest only your interest at end of year one would be $3,000 (+ say $450 product fixing fee)

To earn $3450 after tax you would need a 4.3% Gross savings account (if you are a basic rate tax payer) of a savings account of 5.8% is you are on a higher rate...

This arent that likely for $100k at the moment... therefore I would, if you have savings anyway probably pay off some mortgage...

LJDavis

Sorry typed that in a rush - hope it makes sense (and swap $ for £) got carried away with typing dollars for work!!!