How best to pay off existing mortgage debt

genuineniceguy

Hi, with a remaining balance of just over £16,000 and an interest rate of 1.73% is it better to pay off balance up front and max out on interest free credit card(s) with say £8,000 spend limits on 2 long term cards or is there no real mileage in doing this and continue overpaying each month that will see it finished within 12 months? The interest, although reducing, was £25.59 for December'14 so I would save this with an interest free credit card? Hope that makes sense, this has been on my mind for a while now so any advice or guidance will be most appreciated.

Thrugelmir

Even if you obtain 2 interest free cards you still need to spend the money in the first place.

Personally I would spend my time in seeing what could be saved from my existing budget to accelerate repayment of the mortgage. Being debt free before interest rates rise would be my objective.

genuineniceguy

Thank you Thrugelmir,

We will have reduced term by over 3 years by overpaying by 57% per month which has been a hard slog but as you mentioned getting to mortgage debt free by the time rates rise is the objective. I did read somewhere that someone paid off their remaining mortgage debt whilst continuing to save the interest free card balance incurred then paying off in full, before interest free period had finished.

However as you say finding existing savings without incurring the debt is indeed the better option. Just a little excited to clear it now it is less than 1 year away you understand.

getmore4less

Do the numbers £16k @ 1.73% over 1 year £1346pm interest £150

BT cards have fees so no good that leaves purchase cards

How much do you spend on food, fuel etc per month add that to the payment and see what the new cost is. if there is a holiday coming up that might add a lot.

if you spent £ on CC and use that for the mortgage
£500pm £1846pm interest £112 saving £38
£1000pm £2346pm interest £91 saving £59

Is it worth the bother.

Jonbvn

Thrugelmir wrote: »

Being debt free before interest rates rise would be my objective.

I would be loathed to pay-off such a low interested debt. Our mortgage is a little higher than yours and we pay the minimum amount, with all spare money funelled into savings/investments instead.

E.g. Santander 123 a/c pays 3% (gross) at the moment. When interest rates rise, you just move the cash from savings into your mortgage.

Thrugelmir

Jonbvn wrote: »

I would be loathed to pay-off such a low interested debt. Our mortgage is a little higher than yours and we pay the minimum amount, with all spare money funelled into savings/investments instead.

E.g. Santander 123 a/c pays 3% (gross) at the moment. When interest rates rise, you just move the cash from savings into your mortgage.

With the saving at around £6 per thousand. I stick by my personal assertion that people can find more savings out of their daily expenditure. Than the 12p a week earnt by monitoring their current account balances. Not least that overpaying becomes a discipline that people can relate to. With tangible benefits that resonate through in a persons sense of well being and self satisfaction.