Paying off mortgage with penalty

Ojb

Hi all I have a 5 year fixed @2.69 with a one off 4% penalty the whole term if I go over the limit of overpaying.
Let's say I overpaid 10k and paid 400 for the privelege, so I've paid 400 and the 10k debt is gone.
If I left it in the mortgage that 10k would cost £269 a year in interest.
So after about 18 months the penalty would be negated by the interest? Then after the 18months I'd be saving money?
Am I correct? If so is overpaying maybe not a bad idea when I'm stuck in a 5 year deal ?

PixelPound

So you are at the start of a 5 year fix, or was it longer? You now have 10K to pay this off are are you talking extra borrowing?

Zero_Sum

No it wouldnt as you'd earn £150 in interest if you put in an instant access accout to offset the £269.
If you mixed it with regular savers & high interest bank accounts you could probably match it or even beat it.
If you fancied a bit of risk theres p2p which you can get 3% ish on ratesetters rolling account

getmore4less

Will you have the money to overpay the ERC free allowance later(common to be 10% per year)

If not then you only count the time to next ERC free period.

Then you have the interest on savings, with a few monthly savers and some 1/2/3year fixes you an get a decent return(depending on tax situation)

If the cash flow will be regular you could also look at shorter term options.

if your LTV is getting better you may also be into ditch the fix territory.

Ojb

The re mortgage was intended to buy additional property but I am unlikely to do this now.
So I have 45k in the bank I've already paid 10k off and can pay another 5k penalty free until next year but I will still have 40k and growing sat there.

Ojb

The LTV is about 65% . If I paid the 10% every year I'd still be left with a 90k mortgage at the end of the fix term.