What is the cheapest way to pay off my mortgage?

gillyrob_2

Hi, we have a £42000 mortgage. We have a pension lump sum pay out next month of £33000 and £5000 in savings. we would like to pay the whole mortgage off and have the type that early repayment is allowed. Can we shift the rest of the debt onto a 0% card? We will also be getting an extra £400 a month so can easily afford card payments. Any thoughts and advice will be gratefully received

pgalland

gillyrob wrote: »

Hi, we have a £42000 mortgage. We have a pension lump sum pay out next month of £33000 and £5000 in savings. we would like to pay the whole mortgage off and have the type that early repayment is allowed. Can we shift the rest of the debt onto a 0% card? We will also be getting an extra £400 a month so can easily afford card payments. Any thoughts and advice will be gratefully received

Although it might seem like a good idea - it really depends on the rate you pay on that mortgage, and whether you can get better on a bond market (I assume that you are retired and hence you investment portfolio would primarily be invested in bonds)
Keep in mind that you probably can get 4% net return on bonds (assuming no other income puts you above the personal allowance), I would make sure that re-paying a mortgage makes sense. If you net interest rate is greater than 3/4% - then it would make sense. Otherwise, I would be careful about paying it off.

Also - do you have to repay the whole amount, or can you go half way?

gillyrob_2

Hi, we have a £42000 mortgage. We have a pension lump sum pay out next month of £33000 and £5000 in savings. we would like to pay the whole mortgage off and have the type that early repayment is allowed. Can we shift the rest of the debt onto a 0% card? We will also be getting an extra £400 a month so can easily afford card payments. Any thoughts and advice will be gratefully received

gillyrob wrote: »

No we are not quite yet retired but the company is paying out early and restarting the pension scheme with a new rate. We do not have any bonds either just cash isas. We are paying 5.2% interest so cannot get near that on savings interest.

pgalland

5.2% mortgage??!!
Unless you can remortgage at a much lower rate without paying much admin fee, i'd consider paying it off.
If you're not retired be careful about lump sum on pension... Dble check that it wont trigger any tax liability (not sure about your age etc...)
Pg