To Pay or Not to Pay?

paulo45

As a newcomer to the Moneysaving Expert forum, I would appreciate others views and opinions on my dilemma.

I currently have 6 years remaining on my relatively modest £54,000 mortgage (currently fixed at 5,1% for a further 12 months). However, in order to finance other family expenditure, I need to reduce my mortgage by approximately £200 - £250 pcm. In order to achieve this, I am exploring 2 potential options, either extend the period of mortgage from 6 years to probably 10 years or reduce the size of the mortgage by utilising savings of approx £15,000.

The downside of utilising savings which are currently invested in ISA's, is self evident. However, the dis-benefits of this would be more than offset by me repaying less in interest on the mortgage.

Am I missing something or not?? Any advice would be very much appreciated.

CLAPTON

all things being equal, whether its better to keep savings or repay mortgage depends upon the interest rates.
if your savings produce (after considering tax) more than you are paying in interest on the mortgage then it best to save otherwise its best to repay the mortgage. Obviously, in practice there are other considerations like access to money for emergencies.

as far as you are concerned you have three options. two you have already mentioned and the third is to simply spend the 15,000 to fund your extra 200 per month requirement for 5/6 years when your mortgage will be paid off and you wil have loads of spare money.