Fixed rate mortgage and cash available

sealine

My partner is taking voluntary early retirement at the end of the year and the lump sum would 'almost' cover the outstanding amount on our fixed rate mortgate (4.99%) however there would be a 4% repayment penalty in force up to May 2014 or 2% for the following 12 months. Is it best to pay the mortgage off immediatly and take the hit with the 4% or better to hold onto the cash for a while, continue to pay the mortgage (which will have to be funded from the savings from Jan 13) until the ERF drops or ends altogether?

amnblog

check with your lender how much you can overpay without penalty as a first step.

dimbo61

Can you reduce the term?
Ring up the mortgage centre and ASK the question
I had to pay £50 to my lender to reduce the term from 22 years down to 10.
If allowed you can make the payments from savings each month and reduce the Expensive debt (4.99%) each month without paying the 4% ERC
Just reduce the term so the last payment is at the end of your fix!