Mortgage payment advice

Jigginjim

Hi all, so I'm fortunate enough to be able to pay off the majority of my mortgage due to inheritance, leaving us owing just under 20,000. Im thinking of taking out a loan for the amount and have been offered 3% over five years costing us 1540.60. I reckon this is probably the cheapest way of paying off the difference as quickly as possible but if anyone has any bright ideas I'm all ears!


Cheers :-)

getmore4less

What rate is your mortgage?

Any ERC if you pay a big amount off.

Jigginjim

I'm on the HSBC SVR at the moment. The five year fixed term ended last October and because I knew this was happening I didn't want to re-arrange because of the associated costs.

foxy-stoat

Do you need to pay the remaining £20,000 off as quickly as possible?

Can you not just overpay your mortgage each month?

Jigginjim

Surely by paying it off I'm saving money in the long run? The loan rate is less than the SVR. If I re-arrange a mortgage on the outstanding amount ill have to pay interest and an arrangement fee. This way I'm mortgage free in five years with an affordable re-payment schedule.

getmore4less

There will be cheaper ways to do it.

Needs more details to work out what's best, like current full term

The max you could afford each month

HSBC have a 2 years @ 1.94%

with your £360pm from your proposed 5y @ 3%

after 2 years you have
£11,990 left with the 1.94%
£12,340 left with the 3%

Jigginjim

getmore4less wrote: »

There will be cheaper ways to do it.

Needs more details to work out what's best, like current full term

The max you could afford each month

HSBC have a 2 years @ 1.94%

with your £360pm from your proposed 5y @ 3%

after 2 years you have
£11,990 left with the 1.94%
£12,340 left with the 3%

By current full term I assume you mean when the mortgage I have ends which is 1 March 2033. At the moment we are paying about 450 a month so I guess we could keep that the same.