One off payment

edited 25 March 2015 at 7:51PM in Mortgage-free wannabe
5 replies 922 views
dfonsdfons Forumite
19 Posts
edited 25 March 2015 at 7:51PM in Mortgage-free wannabe
Evening,
I have a mortgage with Scottish Widows, Professional Mortgage tracker at 1.25%. I've got £22781 left and I am overpaying by £633.20 for a total of £1000 monthly. I have used a mortgage calculator and according to it, I've got 22 more monthly payments left.
I have also got £10000 on an ISA and some other savings that I don't want to touch. I am wondering though whether it would be better for me to make a one off mortgage payment with the £10000 in the ISA. I believe this would reduce the period left to 12 months? The ISA is giving me about £10 interest monthly.


Any suggestions?


Thanks in advance

Replies

  • Tony_RTony_R Forumite
    280 Posts
    PPI Party Pooper
    Forumite
    If the interest rate on the mortgage is only 1.25% it's probably not going to be worth overpaying with the money out of your ISA. I'd keep that for your rainy day fund.

    It depends on what your ISA interest rate is, but I'd imagine it is similar.

    Personally I'd continue with your £1000 a month, but not lump over pay the £10,000. You won't have that much of a benefit.
    MFW 2015 - #88 £3,345 / £3,500
    MFW 2014 £2,990,MFW 2013 £7,905, MFW 2012 £12,216
    Opening Mortgage Balance (15th July 2010): £200,999
    Current Mortgage Balance(2nd July 2015): £150,999
    Total overpayments to date: £30,292.00
    Updated 19/05/2015
  • dfonsdfons Forumite
    19 Posts
    Thank you Tony. I forgot to mention that I am renting the property at the moment. The tenants are paying £500 pcm. Am I wrong in assuming that if I make the £10000 overpayment, that would reduce my mortgage by approximately 12 months? Then when I finish paying, I would be about £1000 better off monthly in relative terms, the £633 that I am overpaying plus the £500 rent that the tenants pay?
    I am trying to work all this out in my head but I am not sure whether I am missing something out or making incorrect assumptions.


    Many thanks in advance again
  • dfonsdfons Forumite
    19 Posts
    hi there,
    anybody else could please give me some advice on the above?

    Thanks a lot in advance.
  • JimLadJimLad Forumite
    942 Posts
    Part of the Furniture 500 Posts Combo Breaker Mortgage-free Glee!
    Forumite
    dfons wrote: »
    Then when I finish paying, I would be about £1000 better off monthly in relative terms, the £633 that I am overpaying plus the £500 rent that the tenants pay?

    But you wont have 10k in the bank. You need to work out exactly how many monthly payments are going to be saved by overpaying that 10k. Check out the overpayments calc on this site.
    Mortgage Free 22/03/17
    MissWillow is my OH!
  • dfonsdfons Forumite
    19 Posts
    Thanks Jim. The 10k in the bank are only giving me £10 a month at the moment. I know it's there and could use it for an emergency but I have quite a bit of money in an offshore account. I have been working in the Middle east for a while and managed to put quite a bit of money aside.
    I will have a look at the calculator but I think it would save me around 11-12 months...
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