interest only mortgage

avanda

Hi.
I have six years left on my mortgage which is £109,000 on interest only. I have an endowment which is estimated to end with £40.000.
I only pay 0.69% on the mortgage. My question is, should I switch to re-payment or keep paying the interest only and open a cash ISA.
Many thanks

Avanda

Thrugelmir

If the interest you'll receive is higher in the ISA than you'll pay on the mortgage. Then save into the ISA. Obviously is the situation is reversed, then pay down the mortgage.

I assume you are aware of the high level of monthly saving you'll need to achieve to cover the shortfall.

dimbo61

If you used the £40K endowment to pay a lump sum off the mortgage now and switched the rest to repayment you would end up paying £980 a month to clear the mortgage in 6 years ( APPROX)
As you can only save £5640 in cash ISA,s each year you need to overpay as well.

Trentenders

Don't even think about overpaying with such a good rate. Even after you've maxed out your (and your partner's) ISA allowance(s), you won't find it difficult to earn more than 0.69% after tax.

The big issue for you will be the shortfall at the end of your mortgage term. Start saving!

Yorkie1

NB duplicate thread:
https://forums.moneysavingexpert.com/discussion/4690543