Is paying off my mortgage a good idea?

doni

I've sold my house and am living in an investment flat I usually let out. I've been house hunting for a few months but no luck yet. I'm thinking it may take a while longer before I find something suitable. The outstanding mortgage on my flat is about 48k which I could pay off with the proceeds of my recent house sale.

The interest rate is 2.5% and is out of the fixed period. Should I go ahead and pay it off or would that put me in a less favourable position when I come to offer on a house as I would need to take the equity back out?

genieuk

Would suggest looking at how much of a deposit you would have for new property?
Financing next move, fees involved etc.
How much would you earn renting your flat out, could you rent somewhere cheaper and let yours out.
Might be a kerfuffle but need to look at whole picture

ch4rly2002

I agree with Genie. If paying off your flat means that you end up with a smaller deposit on the house mortgage, you could end up with a higher interest rate on the new place based on a smaller LTV and you would also need to make sure you have enough for legal fees, moving fees etc. so you don't end up in a position where you need to borrow money to cover costs or don't have enough of a deposit.