Paying off Mortgage but fixed until 2016

maisy2nd

Hi
I have received some money to pay off my mortgage (£60k) but my fixed rate ends in 2016. I can pay off 10% now but am wondering
if it is a) worth putting money into savings account fixed for two years and then paying off mortage OR b) pay the penalty of £3k now and pay off mortgage.
How can I calculate which is the best option. My current mortgage rate is 3.9 %.
Appreciate any advice.

Thanks
Maisy

cloud_dog

Lets just assume that no saving in interest is worth the £3k early repayment penalty.

Soooo, if you're only intent is to pay off the mortgage with the money you.....Now

• Pay off 10%
• Put 10% in to the best rate 1YR Fixed rate account (assuming this is a higher rate than an instant access account).
• Put 10% in to the best rate 2YR Fixed rate account (same assumption as above)

Its up to you what you do with the remainder, i.e. 3YR Fixed rate deal (same assumption) or all in a 2YR and then instant access ready to pay mortgage off in full in 2016.

EDIT: If it is on an interest only mortgage see if you can switch it to a repayment mortgage. The 10% overpayment should still be on top of any payments made as part of the mortgage payment

bigadaj

Just to add that the best rates are now in current accounts rather than savings. You can shelter the whole amount in such accounts provided by nationwide Santander, lloyds, tsb, Bos and one or two others at rates of between 3-5% though some are limited to a year only and there is a slight hassle in organising payments in and out on a monthly basis and some need direct debits though it could double the average rate you'd receive so worth considering.