Oh, what to do???

Hi all,

I'm looking for some input to help me decide what to do:

I'm currently on a 5 year fix with the Scarborough at 3.89% (those were the days!), which expires in November 2008. My mortgage at the start was £100k (£85k on capital & repayment and £15k on interest only) and it's now down to around £92k.

I've got inspired by the MFiT club and have started making overpayments of around £175 per month - and TBH could afford more if I got my act together. When my current fix expires next year I will be remortgaging straight away to the best deal I can get at the time, and I do want to make sure that my balance is as low as it can be at that point (coming off such a low fixed rate is going to be a heck of a shock!!).

I've got an ISA that I really just use as a normal savings account - I've never paid in the full amount in a year, and make withdrawals if ever I need to. I've got about £4k sitting in it at the moment, and have other odd savings accounts knocking around, probably totalling around £500.

So, would I be best to consolidate everything into my ISA for now, including the other savings and the overpayments that I was intending to make, and then paying off a lump sum when I remortgage next year? Or is overpaying the sensible option as it takes the cash out of temptation's way?! All advice gratefully received!
Mortgage free in 3: Member no 51 Target: reduce mortgage by extra £10K Currently almost 50% of the way there
There are those who think they can and those who think they can't - and they are both right

Replies

  • ailuro2ailuro2 Forumite
    7.5K Posts
    Part of the Furniture Combo Breaker
    What would your mortgage payment be if you were to pay it, at, say 6.25%, which is what many people are paying at the moment- we got a deal that is base rate plus 0.5%- I think this would be a fairly typical amount?

    Wherever you decide to put the money- (overpaying isn't your best option while the interest rate is so low) get yourselves used to the high monthly payments by increasing the amount set aside for your mortgage each month- that way when they do go up it won't be a shock, and of course, wherever the money is, you can reduce the amount you owe, if you find this is the best option for you.

    Adding £50 a month to the amount, then £100, £150 until you reach what it would be, and come Christmas 2008 you can still afford a nice big turkey/nut roast instead of beans on toast.:beer:
    Member of the first Mortgage Free in 3 challenge, no.19
    Balance 19th April '07 = minus £27,640
    Balance 1st November '09 = mortgage paid off with £1903 left over. Title deeds are now ours.
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