What to do with an extra £25k available to me this year

pstones578

Got 25k coming my way this year (shares saves / savings).

My mortgage comes up in Nov and it will be approx 120k outstanding balance. I am on 1.89% fixed and pay £533. 23 years remaining in Nov.

I am single and plan on that being the case forever so its my salary vs the world.

Im torn between either putting the 25k against the mortgage and keeping the payment about the same but reduce the length which should shave approx 6 years off in one go OR

Put the 25k against the balance BUT put the term back to 25 years. The rationale being my mortgage would then be £375 (not a lot really) and I would be more redundancy proof. Then start to overpay and reduce the term and keep the payments at approx £375

Anyone got any thoughts? Appreciate any input.

MichaelDH

Don't know what your circumstances are, but as you are a one income household I would be tempted to squirrel away £10K for a rainy day (that's a years worth of mortgage payments and bills I would imagine), spend a little on something you might want (holiday, upgrading the car etc.) and use the rest to pay off a chunk of the mortgage.

pstones578

MichaelDH wrote: »

Don't know what your circumstances are, but as you are a one income household I would be tempted to squirrel away £10K for a rainy day (that's a years worth of mortgage payments and bills I would imagine), spend a little on something you might want (holiday, upgrading the car etc.) and use the rest to pay off a chunk of the mortgage.

Should have said I still have my 5k rainy day fund

Khrisjun

With a Mortgage at 1.89% i wouldn't be looking to pay that off,

I would fill up any regular savers / high interest current accounts etc first then depending on your appetite to risk be looking at Bonds / Shares / Funds / P2P - using ISA's where appropriate

pstones578

Khrisjun wrote: »

With a Mortgage at 1.89% i wouldn't be looking to pay that off,

I would fill up any regular savers / high interest current accounts etc first then depending on your appetite to risk be looking at Bonds / Shares / Funds / P2P - using ISA's where appropriate

It makes more sence to pay as much of a mortgage off as poss in my situation I think. Its 1.89% of the balance per year and the balance is many times the value of my 25k hency why I want to pay it off. I would have to be getting 10% return on 25k a year to make it worth it. I think...

edinburgher

pstones578 wrote: »

I would have to be getting 10% return on 25k a year to make it worth it. I think...

I'm not sure I follow. If the interest rate on savings beats 1.89% and you don't have to pay tax on it (i.e. your total annual interest is £1,000 or under), that makes savings more favourable.