What to do?

Kikipie

I’m new to the site and not sure I’m in the right place, but here goes

We are in the fortunate position of being able to pay off the mortgage (£90kish) but with a 3% penalty - or pay off 10% of the outstanding amount each month, with no penalty. Interest rate is low (under 2%, fixed). What’s the best option? I’m tending towards overpaying the 10% until it gets down to £20kish then paying it off in full

Retter

Use the calculator to work it out. I reckon it!!!8217;s cheaper to pay it off in full. If doing that your total !!!8216;interest!!!8217; is £3k. Paying it off over a greater timescale will inevitably be more expensive.

JennyP

I think it's probably cheaper to pay it off. Trying to make a similar decision at the moment.
With my mortgage, there's a £2000 early repayment fee but only till 2022 then I can repay it. Does yours not have something similar?

Kikipie

No, ours has the fee for the life of the mortgage

I was working on the basis that it!!!8217;s cheap money - I think the fee and the interest will end up roughly the same, but we!!!8217;d have the liquidity until another investment matures next year - and could use the money to generate income at a higher return than the 1.5%ish that we!!!8217;re paying

JennyP

Mine is a buy to let and a much bigger interest rate so it might be worth me taking the hit!