5yr fix ending - Pay off the rest or leave little bit ???

Forever_Red

Hi all, I have a 5yr fix (4.39%) ending in Sept and will have approx £10,000 left to pay off the mortgage. I have been overpaying for quite a few years and I am paying just over £1000 a month. Not sure what to do next. I have approx £10,000 in an ISA @ 2.25% and £10,000 in another ISA @ 2%.

Do I pay off the £10,000 with my savings and be £1000 per month better off?

Do I pay off about £9,800 and leave a very small mortgage running, just in case I ever need to remortgage rather than starting a fresh mortgage application?

Or do I see what deals I can get and keep my savings?

Any suggestions or idea's ????

dimbo61

No keep the ISA,s as long term savings ( Tax free)
I would now consider building up ISA,s savings £15K from July and carry on paying down the mortgage.
Your Fix ends in September but does the mortgage term?
You do not give the mortgage rate on the Fix or follow on rate but I guess you are paying a higher rate on the mortgage than you would earn from Savings!
Well done on clearing the mortgage and now to build up savings.

getmore4less

Follow on rate?
Full term of the mortgage

Are you saving other amounts after the £1k on the mortgage?

Forever_Red

getmore4less wrote: »

Follow on rate?
Full term of the mortgage

Are you saving other amounts after the £1k on the mortgage?

I think the follow on rate will be 3.69% with between 18 & 24 months left to go (not sure as I read the paper work a while ago). The repayments drop to around £600 after the fix finishes. If I continue to overpay upto £1000, I cannot afford to save into the ISA's.

So, it's pay off the mortgage and then save or continue the repayments for 18 months without putting any into savings.

Thanks for the replies so far.

ethank

Pay off the mortgage. The ISA rate is less than your mortgage rate. You'll then be able to save more!

onerickylambert

The difference on the mortgage and the ISA rate is £144/year (i.e. how much extra you'd have each year if you paid of the mortgage once the fix ends... unless there is any sort of early repayment charge).

Maybe even better would be completely owning your own home free of any commitment to the bank.

Thrugelmir

ethank wrote: »

Pay off the mortgage. The ISA rate is less than your mortgage rate. You'll then be able to save more!

This suggestion gets my vote as well.

Forever_Red

I think I will try to pay it off then. Would it be worth leaving a couple of hundred quid on the mortgage, for later remortgaging purposes.
Not sure how easy or hard it is to get a mortgage from fresh if the need ever arose.

Yorkie1

Forever_Red wrote: »

I think I will try to pay it off then. Would it be worth leaving a couple of hundred quid on the mortgage, for later remortgaging purposes.
Not sure how easy or hard it is to get a mortgage from fresh if the need ever arose.

I think all lenders are now applying fresh affordability criteria to all applications, whether further borrowing or completely new borrowing. On that basis, I'm not convinced that you'd gain much advantage by leaving some open.

Those with more experience of further borrowing may know better, though.

ethank

Yorkie1 wrote: »

I think all lenders are now applying fresh affordability criteria to all applications, whether further borrowing or completely new borrowing. On that basis, I'm not convinced that you'd gain much advantage by leaving some open.

Those with more experience of further borrowing may know better, though.

i think this is good advice, the days of using your equity in this way are gone.