Pay lump sum or wait?

gelf42

My partner is about to come into a little inheritance and she wants to pay it off her mortgage but I am wondering if this is the best move right now.

She has a mortgage of about 180K that is half repayment and half interest only and would be looking to make a payment of about 30K.

The thing that makes me hesitant though is that within the next two years we are probably moving home and will be looking to switch to a joint mortgage on the new property, so I am wondering if there would be any benefit at all in paying off a lump sum now.

Would she be better off holding onto that lump sum and using it for a larger deposit on a new property and therefore a smaller potential mortgage, or even would there be other options I haven't thought of?

Am I right in saying that a lump sum payment wouldn't affect the monthly mortgage cost anyway, but would reduce the interest and therefore the length of the mortgage?

Thanks for any advice.

CLAPTON

what interest rate is she paying?
what equity does she have



in general over payments on a mortgage can either reduce the length of the mortgage term and maintain the current monthly payment

or maintain the length of the mortgage term but reduce the monthly payment

usually at your choice.

kingstreet

If the rate is good and you would want to "port" it to a new joint mortgage on a new property, you should avoid reducing the mortgage as you would then have less to port at that good rate.