Long Term Mortgage Free Wannabe

katsoocam

Having indecision. My plan was to fully save up our slush fund, then lock our emergency fund away a bit more for a better interest rate - just because we would have enough in the emergency fund for 2-3 months anyway so would be ok with a 120 day notice period anyway. Now I’m a bit less certain as the rates aren’t great and I’m tempted to leave it in the premium bonds and see what happens! Anyone any thoughts? We have a stocks and shares ISA but I wouldn’t risk losing on this money so wouldn’t put it in there. 

katsoocam

My parents want to give us £50000 to keep them below the inheritance tax threshold. Bit of a game changer. Need to think about what to do with it. 

FtbDreaming

Ooh well that’s nice! Is there anything big you want/ need such as a project on the house/ new car/ holiday of a lifetime. Have they said what they’re giving you it for? Eg financial stability, to enjoy, a project? X

katsoocam

FtbDreaming said:

Ooh well that’s nice! Is there anything big you want/ need such as a project on the house/ new car/ holiday of a lifetime. Have they said what they’re giving you it for? Eg financial stability, to enjoy, a project? X

It’s just to avoid inheritance tax, so I think whatever we want really. 

Viking_mfw

I have my emergency fund in PBs but also then funnel some savings via whatever can get a better rate - essentially only the Natwest RS which is a tiny amount. With notice accounts being so rubbish on interest rates I don't see the point really. 

Sapper7695

Could someone please advise us?
Two and a half years ago my wife and I changed our mortgage from  Halifax to Metrobank. We took out a 10 year loan, fixed for 5 years at 1.99%. In addition to repaying our mortgage we are saving regularly and should have enough savings to pay the outstanding balance at the end of the 5 year fixed rate period. We can overpay on our mortgage by up to 20% of the original loan. We tried a small overpayment of £5,000 a couple of years ago and all Metrobank did was re-calculate the balance and lower our monthly payments, thereby keeping the deal to the original 10 years. We now have over 20k in savings and I am considering paying 13k, (our maximum 20%) off the mortgage and then save the difference between the new payment amount which the bank will apply and add the monthly difference to our savings. By next August we will then be in a position to overpay by another 13k. Will this strategy help us to achieve our aim to be mortgage free at the end of the 5 year fixed rate offer?

katsoocam

Sapper7695 said:

Could someone please advise he us?
Two and a half years ago my wife and I changed our mortgage from  Halifax to Metrobank. We took out a 10 year loan, fixed for 5 years at 1.99%. In addition to repaying our mortgage we are saving regularly and should have enough savings to pay the outstanding balance at the end of the 5 year fixed rate period. We can overpay on our mortgage by up to 20% of the original loan. We tried a small overpayment of £5,000 a couple of years ago and all Metrobank did was re-calculate the balance and lower our monthly payments, thereby keeping the deal to the original 10 years. We now have over 20k in savings and I am considering paying 13k, (our maximum 20%) off the mortgage and then save the difference between the new payment amount which the bank will apply and add the monthly difference to our savings. By next August we will then be in a position to overpay by another 13k. Will this strategy help us to achieve our aim to be mortgage free at the end of the 5 year fixed rate offer?

It will because you will overall owe less money - because there will be less balance earning interest. However, you could also ask if they will keep the payment at the same level to see if they will let you pay it off sooner? 

Just checking you know this my personal mortgage free wannabe diary, and you might get more responses if you post elsewhere in the forum? 

katsoocam

Viking_mfw said:

I have my emergency fund in PBs but also then funnel some savings via whatever can get a better rate - essentially only the Natwest RS which is a tiny amount. With notice accounts being so rubbish on interest rates I don't see the point really. 

Yes just our emergency fund and what we need this year in PBs. Agree not a clue what to do with any excess/long term savings at present. Wondering about a LISA for anything we really don’t need? 

caeler

katsoocam said:

My parents want to give us £50000 to keep them below the inheritance tax threshold. Bit of a game changer. Need to think about what to do with it. 

Absolutely a game changer.  I wouldn't even know where to start to deal with that kind of lovely news! x

katsoocam

caeler said:

katsoocam said:

My parents want to give us £50000 to keep them below the inheritance tax threshold. Bit of a game changer. Need to think about what to do with it. 

Absolutely a game changer.  I wouldn't even know where to start to deal with that kind of lovely news! x

I want to put aside a chunk so when we remortgage we can get into the 60% LTV bracket and hopefully get a better deal?