£20,500 to pay off, need advice

angel-delight_5

I'm looking for a bit of advice regarding our mortgage. We're currently with Halifax on a repayment tracker mortgage that runs at 0.44% above base rate until 31 May 2007, and then reverts to the Halifax standard variable rate. We took the mortgage out in June 2005, borrowing £29,965 and we currently owe £20,562. Monthly payments (before the latest rate rise) are £165. Our house is currently worth about £130,000. We took the mortgage out over a 19 year term. We've made quite a few additional payments, these are without penalty, and we can also pay the mortgage off early without penalty. Otherwise we are debt free, but have next to nothing in savings, having paid any spare cash off the mortgage.
I have my business up for sale and there is someone interested in it. Hopefully, in the next few months if all goes well, we should realise about £195,000 from its sale, but obviously its not guaranteed to sell. I would dearly like to pay the mortgage off as soon as possible.
Would it be worth me searching now for a lower rate mortgage (if there are any available)? but it would need to have the same features ie no fees for paying extra amounts off as and when possible, and also fee-free for paying it off in total if my business were to sell. Or would fees and commisions negate any possible savings? Could I somehow borrow the money on a credit card to pay off the amount owing and then transfer it to a life of balance credit card at a lower rate than the mortgage I'm paying? I'm thinking the latter is not possible, or surely more people would be doing it?
I know the amount we owe isn't massive, but the idea of being mortgage free is irresistible and so tantalisingly close.

lizzyb1812

In your current situation - given the info you have given - I would be saving.

You haven't said if you have income guaranteed - eg from employment - after the sale of the business. Whether or not you sell your business, what is your personal income looking like for the year ahead?

You are fortunate that your mortgage is relatively small, as are your monthly repayments. I'm not sure that your mortgage should be your most pressing financial concern right now - how about trying to maximise the price you get for your business.

I've based the above on the info you've given - sorry if I've got the wrong end of the stick

lizzyb

angel-delight_5

After the business is sold, DH is looking to work part-time, and I'm hoping to retrain, so finances could be an issue for a while. I think it's a good point about building up some savings. I think the idea of being mortgage free may possibly have affected my thinking!

DavidHM

It all depends on your ongoing income position and what you get for your business, but I'd personally be putting as much as possible into the mortgage to get the balance below £20k and then, rather than remortgaging, after May I'd borrow the £20k as a personal loan, e.g., £260/month over eight years - presuming the APR of a personal loan is less than the mortgage as then there would be no legal fees, etc. (It's barely worth switching your mortgage due to the fees).

However, with £20k remaining, a competitive rate at the moment and the prospect of a lump sum, there's not much you can actually do to save money.