Paying off a fixed interest mortgage not such a good plan

apb1

I am lucky as I can pay my mortgage off now or very soon. I owe about 113,000 and have until end of April 2020 on a fix of 1.69% before reverting to the SVR.

Instead of paying it off (and incurring either a 2% -now - or 1% - from May 2019 - charge), it seems from my sums (:eek:) that I'd be better off putting 17 grand aside to make the remaining fixed interest monthly payments (to get that mortgage free feeling) and sticking about 96 grand in an 18 month bond with Raisin (split in half with my partner as we'd have to be under 85k to be on the safe side).This will earn me the 98 odd k to pay off the remaining balance by May 2020, and I'd be about 2k better off due to the modest interest difference and the lack of penalty payment. And Raisin give you 80 quid to invest with them too.

No brainer? Or am I missing something obvious? Would be interested to hear others' experience or advice...

jaybeetoo

How much interest a year would you each get from Raisin? What tax rate are you each on?

Every basic rate taxpayer in the UK has a Personal Savings Allowance of £1,000. This means that the first £1,000 of savings interest earned in a year is tax-free. If you are a higher rate taxpayer (40%), then your allowance is £500, and 45% taxpayers have no savings allowance at all.

dimbo61

Can you pay off 10% now ?
Even in a fixed deal many mortgage deals allow 10% overpayment each year.

Zero_Sum

dimbo61 wrote: »

Can you pay off 10% now ?
Even in a fixed deal many mortgage deals allow 10% overpayment each year.

Unless with the post office who have very low overpayment %'s

apb1

jaybeetoo wrote: »

How much interest a year would you each get from Raisin? What tax rate are you each on?

Every basic rate taxpayer in the UK has a Personal Savings Allowance of £1,000. This means that the first £1,000 of savings interest earned in a year is tax-free. If you are a higher rate taxpayer (40%), then your allowance is £500, and 45% taxpayers have no savings allowance at all.

I thought all had £1000 so thanks for pointing out the different rate for 40% taxpayers. I think it'll still come in as a saving even if I have to pay a bit of tax but will double check!

apb1

dimbo61 wrote: »

Can you pay off 10% now ?
Even in a fixed deal many mortgage deals allow 10% overpayment each year.

That was the original plan - to reduce by 10% then pay off the balance to save a few bob, but if interest I'm getting is more than I'm paying...