should i pay off my mortgage

foxybabe

Hi, I have just got a settlement figure for my mortgage which will be £28,327,46p. At present we are paying 2 1/2% interest (variable). I put 30k in a long term savings account at 4% two years ago which will be available in September this year. my question is if you were in my position, would you pay off the mortgage?

I was deliberating this two years ago but because the interest rate was so low I didn't bother. I was reluctant to tie up the lump sum for two years also as it seemed impossible then that interest rates would stay low for this long. So I bit the bullet and tied the money up thinking things would be different two years down the line when in actual fact they are pretty much the same which leaves me with the same dilemma.

Many thanks in advance for any advice.

poppyoscar_3

What will the ineterest rate be once the 2 year lock-in is up?
My guess is the rates won't stay this way much longer, but then I'm no financial guru!
Can you get a decent rate not locked in, so you can just move if you have to?
PO xx

getmore4less

If the mortgage is a tracker look for a savings tracker even if it has lockin you will track the positive differential.

There are shorter terms/instant at around 3% but net of tax it is hard to find something to better 2.5%

foxybabe

Thanks for the replies. I don't know what the best lock in interest rate will be until September as I can't really start looking until then. When I locked the money in before the rates were very poor unless it was tied up for two years. I was really reluctant to do this but am glad I did now.

dimbo61

so you are earning 4% ( Before TAX ? ) from your savings while at the same time still have a £28K plus mortgage !
Is it a repayment mortgage ? or IO and do you have any other savings ?
Me I am working hard to clear our mortgage ASAP
So if you have 3/6 months of income in savings ( cash ISA,s ) why not get rid of that mortgage unless you plan on moving soon !

foxybabe

dimbo61 wrote: »

so you are earning 4% ( Before TAX ? ) from your savings while at the same time still have a £28K plus mortgage !
Is it a repayment mortgage ? or IO and do you have any other savings ?
Me I am working hard to clear our mortgage ASAP
So if you have 3/6 months of income in savings ( cash ISA,s ) why not get rid of that mortgage unless you plan on moving soon !

Yes at the moment the money is earning 4% because I locked it in for two years. This finished in September and I won't know until then what the next rate will be.

We aren't planning on moving at all in the near future. I have just been made redundant and am now only working a couple of days a week so my income is greatly reduced. My DH is working full time so I am just trying to work out what is the best way to go regarding savings/mortgage.

I was just after advice/opinions really.

DVardysShadow

dimbo61 wrote: »

so you are earning 4% ( Before TAX ? ) from your savings while at the same time still have a £28K plus mortgage !
Is it a repayment mortgage ? or IO and do you have any other savings ?
Me I am working hard to clear our mortgage ASAP
So if you have 3/6 months of income in savings ( cash ISA,s ) why not get rid of that mortgage unless you plan on moving soon !

OP, assuming standard rate tax payer, is getting net 3.2% on savings but paying 2.5% on mortgage. So gaining 0.7% on £28,000. Say £200/year up for leaving things as they are. Does not make sense to pay off the mortgage!!!