Coming to end of fixed rate deal and have some unexpected cash - should i pay mortgage off in full?

Moogs_lumox_NI

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.

Brie

answered on your other post in being mortgage free!

TheMilkmansDad

I'd pay the mortgage off. Put the money you'd be paying monthly into some sort of savings - pensions, ISA, Premium Bonds - depending on your future requirements.

It's the feel good factor of not having the mortgage that swings it for me. Financially, you'd probably be better of re-mortgaging and investing  the money as required.

safvoxi

Personally I'd remortgage and put some of the money into junior ISAs, index funds etc.

But it depends on your individual financial situation and future plans.

Moogs_lumox_NI

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.

getmore4less

Pretty simple calculation for a 5 year deal @ say 1.25%

£602.06pm interest is £1,123.

basic options pay it off and save your £615pm to give some savings
keep the £35k in savings and top up £13pm from the space cashflow 

if you are a rates can only go up kind of guy that says keep the cash because savings rates should go over the mortgage rate when they do go up.

you can get fixed rate saving to match or better the mortgage rate to cover the interest


Don't you get decent life cover through work?