Should I pay some mortgage off

jk38

Got a repayment mortgage with £35k outstanding at around 5% and ends 2020

Monthly payments are £450 currently

An endowment I kept going (from an old interest only mortgage) matured today for £22k

I know that in the last few years of a repayment mortgage the proportion of the loan itself ( as opposed to the interest) increases

I'm thinking I won't see the true benefit of the reduced monthly outgoings and I won't have the 22k to invest if I use it to part pay off
the mortgage

Conversely if interest rates go up I could regret having the 22k tied up in a long term investment

So, Should I use the £22k to pay off some of the mortgage or try to invest it ?

I can pay off without extra penalties up to the end of the year as part of the Manchester Building Society conditions

shop-to-drop

I would. 5% would be difficult to beat return on an investment. Paying off the mortgage would be no risk either whereas investing is never 100% risk free. Take away the temptation to spend too, which would be a big plus point for me.

dimbo61

Why not pay off some of the outstanding mortgage now ?
Do you have any other savings ?
If you have more than £16K in savings you cannot claim any benefits should you lose your job so I would pay off £6K now and put the rest into ISA,s or other savings
With a mortgage rate of 5% you will not get this from savings after TAX

dimbo61

If you do pay a lump sum off just keep the mortgage payment the same and you could be MORTGAGE FREE IN 3

Thrugelmir

I would target on repaying the mortgage, There after you'll have £450 a month to invest in a variety of investments, i.e. pension, ISA's etc.


If the endowment has matured. Use the money that used to pay the premiums to overpay the mortgage as well. Then it will be gone in no time.

jk38

Yes Good point about the endowment payments

I think I'll use the 22k to reduce the mortgage and up the monthly mortgage payment by the endowment monthly amount and crack on with getting it completely cleared as soon as possible with any overtime money

Once it's cleared Then I can use the 500 a month for a retirement investment

I was just worried about the 450 per month getting squandered

But got a plan now and feel better now I know what is best to do with it

Thanks for the advice

shop-to-drop

jk38 wrote: »

Yes Good point about the endowment payments

I think I'll use the 22k to reduce the mortgage and up the monthly mortgage payment by the endowment monthly amount and crack on with getting it completely cleared as soon as possible with any overtime money

Once it's cleared Then I can use the 500 a month for a retirement investment

I was just worried about the 450 per month getting squandered

But got a plan now and feel better now I know what is best to do with it

Thanks for the advice

Good plan!

Exciting too.

seven-day-weekend

Well done