How much will I save if i payed off my mortgage today?

double-slit

Hello everyone. I am new to the forum.
The balance on my mortgage (Nationwide) is £37,000 with 13 years left to pay (2027.)
What is the calculation I need to do in order to work out if I pay the mortgage now?
I am due a lump sum,is the outstanding balance £37,000 plus interest?
The interest rate is 2.5% and my monthly repayment is £277,what is my best option with the facts I have stated.
How much can I save by paying the mortgage off now?
I am not good with the maths so all I ask if you can offer some guidance.
Thanking you in advance.

Lois_E

Hello double-slit and welcome. :wave:

Look up at the top of this page. Just below the pic of Martin there is a multi-coloured bar with the various areas of the main site. Hover over the one called Mortgages & Homes. A big menu will appear. On the top right corner of it you will see the words Overpayment Calculator. Click on that and you will get to the Ultimate Mortgage Calculator, where you can enter your numbers and it will do all the maths for you.

edinburgher

You can work out whether you're better to save or overpay by comparing the best after tax savings rate available with the mortgage rate.

Assuming you're single (you haven't said otherwise), you could save £2.5k with N@tionwide at c. 4%, £3k with Clydesd@le Bank at c. 3.2% and the rest with S@ntander @ c. 2.4%.

It looks like paying the mortgage or saving is currently much of a muchness for yourself.

Looking at things a different way - how is your provision for later life - do you have a pension etc. where some of this money might be more profitably stored?

Lois_E

Good points, Ed.

double-slit - Ed has translated the gross interest rates on savings to net rates for a basic rate taxpayer. If you're not a basic rate tax payer, you'll need to adjust. Martin's Ultimate Mortgage Calculator has another tab for doing that for you - it's called Repay Mortgage with Savings?

double-slit

Many thanks for the info,when I plug the figures it shows a saving of approx £6000 if I payed it off now in interest. The total cost is £43,376 and my current mortgage is £37000.
hopefully I am reading this correctly.

getmore4less

you only pay interest while you have the loan to pay it off is the amount owing(+ a bit of interest from the last date it was calculated<month) + any closing fees these will be on your Mortgage documentation.

You can call and ask fro a redemption amount for a given date.

Be careful with the MSE calculators they have errors in them or are structured in a way that gives misleading information the basic overpayment is probably OK.

Easier to use a simple calculator then try to understand how mortgages work.

I Use
http://www.whatsthecost.com/mortgage.aspx

if you press details it shows the amounts month by month.

The mortgage will cost you over £6k in interest, but as has been pointed out you can get close to the same interest from savings.

make sure you don't give up all you cash and then not have an emergency fund.