Should I pay off mortgage?

lacroix500 · 27 April 2018 at 11:58AM

Hi there, looking for some advice!
I have £27000 remaining on a mortgage which has 9 and a half years left. I am paying 3.99% interest and have been over paying for some time. It is for a property I do not live in, I have it rented out and live with my partner. The property was my first flat and in good standard but not in the best of areas, although it has increased in value. I would never live in the flat again and just think of it as an investment. I now have £30,000 in savings that I have saved over the past 5 years through regular savers and ISAs and considering whether I:-
a) Pay the mortgage off early and start saving again
b) Use the money as a deposit for another buy to let property - this may be a difficult option as I am no longer an owner occupier and would need to do this with my partner, who is not so keen on the idea.
c) Carry on paying the mortgage and put the £30,000 into a fixed rate saver for another year (I can get a rate of 1.85% on this)

I am just scared to make the decision as it is a lot of money so any advice appreciated.

Thanks!!

mikenolan · 27 April 2018 at 2:58PM

Are you locked into a deal at the moment or are you able to switch to a different mortgage? One option might be to switch to an offset mortgage that allows you to offset the full balance. That gives you the flexibility to access the money if you ever need it but means you're not paying £5k of interest over the next 9 years. You can also move money from the offset account into any savings accounts you come across that would earn you more interest, for example, move £300/month into a First Direct regular savings account earning 5% and after 12 months move it all back.