First time remortgage help needed

GandalfDDUK

Hi, looking for a bit of advice please, currently on a Northern Rock Interest Only mortgage on its SVR paying £325/mth with £86000 mortgage and 21 years left. Currently paying an extra £350/mth into ISAs to try and build up the £86000.
No idea on value of house as never had it valued since we moved in back in 2003 when we bought it for £108000, (not planning to move so not bothered what its worth), however, had a chat with a halifax mortgage advisor (as thats where my current account is) and she thinks it should be worth at least £115000 thereby giving me a 75% LTV though using the valuation calculators I get it nearer to £140000.

Now, have had a good long think and look around using various sites and am looking towards remortgaging to Britannia's 5yr fixed deal at 3.39% with the £999 arrangement fee/ maybe even the 10yr fixed as have no intention at this moment in time in moving as kids are 10 and 8.
Now my dialema is taking into account the £325 mortgage and extra £350 saving (£675) what to remortgage to and for how long. I am thinking of reducing the £675 by at least £100/mth as we could do with this extra in our monthly budget.
So do I spread the mortgage over less years (16 I think it works out at) and spend the remaining £575 on the repayments or do I remortage for 21 years as thats whats left which would reduce repayment to £478 thereby giving me another £100 to invest.
I know I would reduce the mortgage by 5 years but if I saved the £100/mth that would give me £6000 after 5 years with no interest, which could be overpayed at the end of the 5 years when its time to remortgage again or put to one side as a rainy day fund.

Any advice on if I am thinking clear or you see a better route is welcome, hope i've included enough info and thanks for your time.

Thrugelmir

Pay down the mortgage. Your savings won't be earning anywhere near the same rate of interest.

Your SVR is 4.79% currently.

fflump

You are doing the right thing getting onto a repayment mortgage you are throwing money away at the moment staying IO when you can afford the repayments and are getting less than your mortgage rate from your savings.

What I always do with regard to mortgage term is keep the term long, but make sure that overpayments are possible. This gives you flexibility to shorten the term (by overpaying) or keep the payments low if you need the extra cash.