Early repayment?... then what?

Doctorbee

Hello, I recently (sadly) received inheritance that I could potentially use to pay off my mortgage early - I probably wouldn't have done that a few years ago but having just lost my job and zero interest rates (& threat of negative interest) - it seems like a sensible thing to do. There is early repayment charge, but this is equivalent about 18 months of the interest I am currently paying. Question 1: Is this a good plan? (I am pretty risk adverse as I have no-one now)
If I do that, it would leave me with enough (60%?) to put towards a little flat that I could live in (and rent owned house) or rent - but could provide me with some income going forward.Question 2: is this a feasible/sensible idea?
Does any of this sound like a good plan?
Thanks in advance for any advice or similar experience.

    

MattMattMattUK

One thing in relation to early repayment, when does your current fixed deal end? You can usually repay at the end of a fixed deal with no early repayment charges. You can also usually overpay by a percentage without penalty even during the fixed deal, which you could do now to reduce future interest charges. 

Doctorbee

Thanks for responding Matt! My fixed deal ends in Dec 2023....Overpayment is a possibility but I can only do 10% in year..... 

MattMattMattUK

With December 2023 being 26 months way and you have said that the early repayment charge would be equivalent to 18 months interest then it appears you would be better off repaying the amount and stomaching the repayment charge, although you should also account for the change in interest paid if you repaid 10% each year in the interim, but I suspect that it would still leave you better off. 

getmore4less

What rate is the mortgage and what % is the ERC now and does it change.
what is the full term amount and payment?
it often works out cheaper to just let them run and pay the max you can.