We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
Paying off interest only portion of mortgage?
jonboysez
Posts: 70 Forumite
Hi
Can anyone answer this question by showing the calculations? I had a sub prime mortgage of which £20,000 was interest only and the rest on repayment terms. I had a life insurance policy that came to an end and decided to use £20,000 of the proceeds to pay off the interest only portion of my mortgage - but would I have been better leaving the interest only portion and paying off £20,000 from the repayment portion of the mortgage, or does it make no difference? My mortgage is 1.75% above BOE base rate so turned out quite good after the initial high rate years ago - I had approx 15 years left on the mortgage when I paid off the £20k and the balance on the repayment part was approx £70k with int running at 2.25%. Would I have been better saving the £20k in some form of high interest but very safe bank account?
Can anyone answer this question by showing the calculations? I had a sub prime mortgage of which £20,000 was interest only and the rest on repayment terms. I had a life insurance policy that came to an end and decided to use £20,000 of the proceeds to pay off the interest only portion of my mortgage - but would I have been better leaving the interest only portion and paying off £20,000 from the repayment portion of the mortgage, or does it make no difference? My mortgage is 1.75% above BOE base rate so turned out quite good after the initial high rate years ago - I had approx 15 years left on the mortgage when I paid off the £20k and the balance on the repayment part was approx £70k with int running at 2.25%. Would I have been better saving the £20k in some form of high interest but very safe bank account?
0
Comments
-
You'd have been best paying off whichever had the highest rate (assuming you couldn't beat either with savings).0
-
If you've done it now does it really matter?
If you'd paid off £20k from the repayment portion you would still have the £20k that would need paid off at the end of the mortgage term.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 354.4K Banking & Borrowing
- 254.4K Reduce Debt & Boost Income
- 455.4K Spending & Discounts
- 247.3K Work, Benefits & Business
- 604K Mortgages, Homes & Bills
- 178.4K Life & Family
- 261.5K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards