Future mortgage question! 24 January 2013 at 2:14PM in Mortgage-Free Wannabe 5 replies 511 views

moneysaymoneydo

Hi,

I wonder if anyone out there can help, i have approx £20k left on my mortgage. I intend to move house in the next year to which i will looking for a house at approx 300k, now the question is i have approx £120k equity in house i am in now and i would be purchasing alone and hopefully borrowing £180 so my question is meantime i have an extra £500 a month do i save it or do i knock the 20k left on my mortgage now? not sure if any tax beneifts from paying off mortgage or saving for bigger deposit for next house, thank you for those who take the time to reply!

andrea_louise

Firstly see if there are any financial implications for overpaying. I am on a lifetime tracker with nationwide, and during the first 5 years (which was up to dec 12) there was an early repayment charge for any overpayments of more than £500. It was a significant sum too (circa £700). Once that is established, use the overpayment calculator and savings calculator. Chances are the overpayment will win hands down due to the poor interest rates on savings accounts.

Well done, in preparing for the forthcoming move.

moneysaymoneydo

Thanks Andrea for your reply!

I have no penalty for paying but just wondered if worth having a 0 mortgage balance when comes to buying new house ie, am i taxed on that amount etc, thanks again you were my only reply.;)

Calfuray

moneysaymoneydo wrote: »

Thanks Andrea for your reply!

I have no penalty for paying but just wondered if worth having a 0 mortgage balance when comes to buying new house ie, am i taxed on that amount etc, thanks again you were my only reply.;)

Sorry

I know nothing so I lurked and then ran away

I have heard something in the past, very vaguely, that it is best to keep mortgage open with small balance so that you can port existing interest rate and not move onto higher one etc, and a few other advantages.
Might be wrong though, I had to clear away a lot of dust to come up with that nugget, so excuse me if I'm talking gibberish!

andrea_louise

moneysaymoneydo wrote: »

Thanks Andrea for your reply!

I have no penalty for paying but just wondered if worth having a 0 mortgage balance when comes to buying new house ie, am i taxed on that amount etc, thanks again you were my only reply.;)

As long as you are living in the house, cgt (capital gains) will not apply. I assume you have lived there continuously, and it has never been rented out.

Andrea

andrea_louise

Calfuray is correct in that some mortgages can be ported over. Have you looked at the best buy tables to see whether it is worth porting yours over, or if there are better deals out there?