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Advice please paying mortgage off early

Advice please,
I'm in a lucky position whereby I can pay my mortgage off early 
My balance is £88k , my current term is 1.94 until 31/7/24, current mortgage payment of £805 a month. Erc is £2402. 
Would I be better off staying as I am or paying it off and trying to get a 2nd home , I've owned my property 17 1/2 years and paid £195k and market value is now about £370k


  • savingholmes
    savingholmes Posts: 27,681 Forumite
    Name Dropper First Anniversary Photogenic First Post
    What you would need to do is work out various options.

    1) How much interest are you due to pay between now and 31/7/24 - and it that more than the ERC?
    2) Could you get the money you would otherwise pay off your mortgage - earn more than the difference between the ERC and the mortgage interest you are paying by saving or investing elsewhere?
    3) What's your pension situation like? You could investigate pension options and potentially get a big chunk of money back in tax relief into your pension if you paid it in there instead. You could do that via an employer scheme or some kind of self invested / personal pension. The 25% uplift as a basic tax payer could trump any financial gain you get from early repayment of the mortgage - particularly where you have a penalty to pay. Of course it depends how far away you are from retirement and what your current pension status is. Although there's a £40K p.a. limit if you are nowhere near the threshold in previous years - I think 3 - you can use some of that allowance. If you post your question on the pension boards there are far more experienced people than I who can spell out some options for you.

    No-one on here can give you advice... we can only suggest things for you to consider...

    I am not a financial adviser of any kind - just a fellow forum member.

    Achieve FIRE/Mortgage Neutrality by mid 2030
    1) MFW Nov 21 £201,999 with 235 payments to go - now £182,428 Equity 27.02%
    2) Spend on handyman & external building works & new patio door £13.45K
    3) CC £7.4K on 0% spends card but offset by £34.25K savings (part EF, part future home improvement)
    4) Mortgage neutral by June 2030 AVC £10.1K/£127.5K AVC target 8% value at 15/5
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