Inheritance and Mortgage

jaycee202

Hi all,
I wonder if anyone had any good advice on our current situation regarding a bit of inheritance and paying off our mortgage in the most efficient way.
We currently have £78,000 left on a 10 year fix and flex mortgage, which is at 2.59%.  Our monthly payment is £550 a month and i overpay as much as possible yearly.
We have an allowance of 10% (From Jan 1st every year) to over pay the mortgage, which I gather is pretty standard.
The mortgage ties us into fixed terms for 5 years and then we are free to move mortgage, overpay as much as we want or stay on 2.59% for the 10 year duration.
The first 5 years have an overpayment penalty of 5% year 1 and then decreasing 1% annually. 
We have a lump sum of £30,000 to pay into the mortgage and ideally I'd like to clear the mortgage in around 4 years, with a combination of more overpayments and the £30k.
So far we have looked at the following options`;
Overpay with the £30k now (Allowance £7800 - 10% ) £22,800 overpayment penalty @ 4.0% = £912 - But saving on interest we will accrue on the £30k (£2331 over 3 years).
Invest the £30k with low return or put it into Premium bonds.
Ask the bank if we can Shorten the term (Currently at 15 years 10 months). 
Not sure if we are getting our figures right here, so any help or advice would be much appreciated Thanks

powerspowers

Hi Jaycee
your saving in interest will be at least £7k over the life of the mortgage so definitely worth paying the early repayment charges. 

However it’s worth looking at whether you could increase the funds by investing them elsewhere ie would you get a higher than 2.59% on them. I don’t know the answer to that and it will depend on the level of risk you are happy with. I’d also consider your position re pensions and an emergency fund. Would be worth getting financial advice. 

All the best with whatever you decide and sorry for your loss x