most cost effective way to redeem mortgage

ikorodu

I'd like to pay off my ybs mortgage, but would like to make sure I do so in the most cost effective way.

in round numbers I have £89300 balance. The terms allow me to overpay penalty free by 10% of the balance at the start of the last 12month period ( balance then was 91422). I'm in a fixed deal of 2.44% with a penalty of 4% of the remaining balance needing to be paid on redemption. So by making an over payment of my max 10% and then redeeming the rest should save me around £450. Am I right?

haras_nosirrah

Most cost effective way is to pay off the max allowed for free and then stick the rest into the highest interest rate account you can find until you can clear a other chunk / redeem in full penalty free. When does your tie in cease?

anselld

4% of 9142 = £365.68 "saved".
However it will still cost you £3291 in unnecessary fees.
Why can't you wait till the fix ends?

ikorodu

Fix doesn't end until sept 2019. Whilst this is a good rate I've done the sums on a fixed savings bond as well as max over payments per year and we've decided we'd prefer to pay off now rather than wait.