Paying off mortgage

tonysharp1

I have £6000 from an endowment policy. I have a mortgage of £32000 and another for £6000, is it best for me to pay off the £6000 mortgage or reduce the £32000 one. Both have approx. 10 years to completion at an interest rate of 2.5%.

kingstreet

If you can get a better rate on the savings, put the money in a savings account as it will effectively fund the mortgage.

If you may need a mortgage in the future, perhaps for a house move, this will enable you to "port" the current rate to a new mortgage with the same lender, provided you qualify.

dimbo61

With many cash ISA,s only paying 2.1-2.3% if you have emergency savings ?
I would clear the smaller mortgage and then overpay the other mortgage each month by the amount you are saving

pauljoecoe

kingstreet wrote: »

If you can get a better rate on the savings, put the money in a savings account as it will effectively fund the mortgage.

If you may need a mortgage in the future, perhaps for a house move, this will enable you to "port" the current rate to a new mortgage with the same lender, provided you qualify.

Do tell where you can get the equivlent of 2.5% tax free savings without tieing yourself in for 5 years.

ValHaller

pauljoecoe wrote: »

Do tell where you can get the equivlent of 2.5% tax free savings without tieing yourself in for 5 years.

If you can get it at 30 or 60 day interest penalty, a 5 year ISA might be a good deal. 30 day penalty at 2.75% would still pay for itself if you had to withdraw at 12 months because the mortgage interest rate has gone up.