Paying off a lump sum

Good morning,

After some advice please. Due to an end of work contract bonus and receiving 4 months pay in one go, I am about to receive about £20,000. I have £4,500 on a credit card which I will pay off immediately, otherwise I have no debts (minus student loan). I currently make overpayments on my mortgage and have done for about a year now. When I took out my mortgage it was on a 37year term (I didn’t earn much then) and was on shared equity, 8 and a half years ago. At the end of last year I was able to buy the 20% back. My mortgage is currently at about £67,000. I will be moving abroad again in August (earning half of what I do now) and will be renting my property out (I’m hoping the mortgage company allow this) so I don’t know what the interest rate will go to. Should I use the rest of that money to pay off a lump sum? Or just continue to make overpayments if I can and keep cash available in a savings account? In the long term if I return to live in the U.K., I ideally would like to buy a house (current property is a flat) but hard for a single person down south. Thanks very much!

Replies

  • NorthernMonkey1NorthernMonkey1 Forumite
    328 Posts
    Sixth Anniversary 100 Posts Combo Breaker Mortgage-free Glee!
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    You don't say what savings you have. You're about to have a period of changing jobs and moving about, so its probably a good idea to have £10,000 in savings to cover anything that crops up. Paying the CC is a no brainer. it's costing a fortune to have that much debt on a CC. The remaining £5,500 I'd pay off the mortgage
  • Thanks for your reply. I don’t have any savings at the moment due to recently buying the 20% of the mortgage on the shared equity. The credit card had 2 big payments on it recently so hopefully won’t have too much interest on it as I will pay it off next week. Appreciate your advice, thank you.
  • JayRitchieJayRitchie Forumite
    514 Posts
    Fourth Anniversary 500 Posts Name Dropper
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    Hi

    What is the interest rate on the mortgage? What % do you now 'own'?
  • SocajamSocajam Forumite
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    1,000 Posts Second Anniversary Name Dropper
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    Good morning,

    After some advice please. Due to an end of work contract bonus and receiving 4 months pay in one go, I am about to receive about £20,000. I have £4,500 on a credit card which I will pay off immediately, otherwise I have no debts (minus student loan). I currently make overpayments on my mortgage and have done for about a year now. When I took out my mortgage it was on a 37year term (I didn’t earn much then) and was on shared equity, 8 and a half years ago. At the end of last year I was able to buy the 20% back. My mortgage is currently at about £67,000. I will be moving abroad again in August (earning half of what I do now) and will be renting my property out (I’m hoping the mortgage company allow this) so I don’t know what the interest rate will go to. Should I use the rest of that money to pay off a lump sum? Or just continue to make overpayments if I can and keep cash available in a savings account? In the long term if I return to live in the U.K., I ideally would like to buy a house (current property is a flat) but hard for a single person down south. Thanks very much!

    I would pay off the credit card.
    I would not use any of the money on overpayment towards the mortgage. You are moving abroad, have no idea how things will work out and in the event you have to rush back to the UK will need to have money to live on.
    Not sure what you plan on doing with your bank/credit cards, but do not close them.
    As long as you have a UK address with someone you trust, you can keep your bank/credit cards and no one will be the wiser. Sign up for online banking and make sure to use only one computer to logon to your accounts.
    As a goodwill gesture pay 1,000 towards towards your student loan.
    I know a lot of people feel that they don't have to repay etc., but getting that loan was not free. What we need to think about it what about others that are coming after us. Yes, someone will say, I got mine to hell with everyone else, and its the someone else that will eventually suffer if we all thing that there is no need to make an effort to repay.
    Not sure about informing the bank about the mortgage, that's tricky situation.
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