give to them or not?

david29dpo

my mortgage is £37000 interest only at 4.64% , likely to go up 0.25% after the recent rise. i can pay 10% of the capital fee free per year if i wish. do i post a cheque for £3700 to my lender of will i be better off opening one of the regular saver accounts? ie A&L at 10% paying £250 a month for 12 months?

gallygirl

Ok, rough maths - if you pay £250 into A & L at the end of the year you would have around £3110, assuming basic rate tax payer. So, £110 interest.

However, assuming from what you've said you have the £3700 upfront you would get additional interest on what you hadn't yet put into A & L. Say 3k in an ISA @ 5%, use the £700 you can't put in an ISA to pay 1st 2 months of A&L and £100 towards 3rd month, I reckon you'd have an extra £99 interest, so say £210 in all.

I reckon you'd save around £184 interest on mortgage. Someone correct me, not v good at interest only calcs!!!!!

So, slightly better off in savings account, if you can be organised enough to transfer out of ISA each month. But, if you may be tempted to spend it, better to pay off mortgage!!!