Early Redemption Charge?

CotQ

Hi,

I have just came into a position where i am finally able to pay off my mortgage.
Having called the bank for a redemption figure, paying off the mortgage just now will cost an extra £1200. If i was to wait till this time next year the fixed term will have ended.
Would it be more sensible to invest the money, in say a cash ISA , and pay off the mortgage once the fixed term had ended?

Thanks.

[Deleted User]

Depends on the amount and the rates of your mortgage and ISA.

But definitely either yes, no or maybe.

CotQ

Mortgage is approx £45000, rate 3.79%
I guess ISA rate would 1.5%

El_Torro

£1,200 is 2.67% of 45,000. Since your rate is 3.79% it could be worth doing.

Or if you can take advantage of some current accounts (2 Santander accounts at £20k each for 3% for example) you'll be marginally better off than paying the redemption charge.

Krash420

You need to compare the amount of interest they will charge you between now and the date that the fixed rate runs out (El Torro's calculation assumes you have exactly a year left - I suspect it's less than a year.

Compare the amount you'll be charged in interest with what the fees are and then see where you can place that money to get a return.

One other thing to consider is that most mortgage providers also allow you to pay 10% extra in a year, which means you can put £4500 now either way to instantly reduce the interest you'll be charged.

ACG

Deleted_User wrote: »

Depends on the amount and the rates of your mortgage and ISA.

But definitely either yes, no or maybe.

Good to see people who do not sit on the fence.