Should I pay off my Mortgage in Full now - as I am coiming to end of fixed rate.

Hi my fixed rate mortgage of 2.4% is coming to an end in about a month and a half, at that time it is due to go up to about 4.2%.  When my fixed rate comes to an end there will be about £35,000 left on the mortgage.  I have recently come into some cash from a will, which is a little more than the £35,000.  Would i be best to just pay it all off and be done with the Mortgage or should i go for a new 5 years fixed rate deal - my broker says he would suggest i go for a new 5 year deal to clear it as he can get me a rate of between 1.25-1.5%.  Would it be best to clear it and not have to pay the roughly £615 a month i pay the moment, or is it better to take the deal and use the cash elsewhere, i am 42 with two kids and have a reasonable good works pension via my local government employer.  For extra info as part of the will i have also inherited a property with a value of about £100,000 but i would expect that it could take me a year or more to sell the property.  My two kids are about 10 and 13 so not at uni etc yet.  just not sure whats the best option to go for with the Mortgage as i never expected to be in this situation.

Comments

  • Brie
    Brie Posts: 9,982 Forumite
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    Pay it off.  I would think (cynical!) that the broker is suggesting a new deal so he earns his %%.

    Take the £600+ a month and put it into some sort of savings - you won't notice the difference so that will be easy. That will build up nicely to allow you a good buffer as well as some nice hols when we're out of lockdown and still have enough to help the kids with uni and their own housing purchases.
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • I figured that would be a part of the brokers thinking but also wondered since the new rate is so low would i be best to take the small interest hit over 5 years if there was anything better out there i should do with the cash instead 
  • Just remember it doesn’t need to be an either or, you could repay half and put the remainder elsewhere (S&S being the obvious place for higher returns but unsure if this is suitable for your situation). 

    Did you ask why your broker suggested the mortgage? On the face of it it could be for self serving reasons or they may know something else. 


  • i was very impressed by my broker, had a meeting with him last week and he listened to my updated financial situation and straightway without trying to give me any sort of hard sell advised that I clear the Mortgage and didn't try and sell me.  He then also at my request helped me get the best possible life insurance and critical illness cover option, as my previous policies were tied to the mortgage and were depreciating quickly and would no longer be the best option for me.
  • Ooh congratulations on being mortgage free then! I would have paid it off if it was me! That’s why we’re all here 😂

    Good luck on your next venture x
    Mortgage started August 2020 £69,700
    Mortgage ends Aug 2050 MFW: Aug 2027 
    Current Balance: £60,200 (59.9% LTV)
    MFW2020 #156 £723.13
    MFW2021 #26 £1184.71
    MFW2022 #11 £197.87
    MFW2023 £785
    MFW 2024 £528.15

    Determined to make it! 
  • Congratulations moogs! Do you have a plan for what you are going to do with the money you aren’t paying on the mortgage each month? 
    MFW 2021 #76 £5,145
    MFW 2022 #27 £5,300 
    MFW 2023 #27 £2,000
    MFW 2024 #27 £1,075 /£3,600


  • Exodi
    Exodi Posts: 2,861 Forumite
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    edited 20 September 2021 at 3:06PM
    Without meaning to be pedantic, but due to the wording of the thread title, I'll double check - better to be safe than sorry!

    Many fixed team deals penalise significant overpayments during the fix window. As such, if you did intend to pay off the mortgage in full, you may fare better waiting until after the fixed term expires, then paying the balance in full.

    I'm also one on the side of paying off the mortgage. You won't achieve 1.25-1.5% in a typical savings account so would need to tie it up in an investment.
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