Moving House - Still tied in to existing mortgage.

pollocmc

Hi,

I'll probably be moving house in the very near future. Thing is, I am likely (fingers crossed) to make some cash out of the deal (downsizing in a way). However I remortgaged in october last year on a 3 year discounted rate. There are penalties for early redemption, though I assume as has been the case in the past that if I were to take the same amount out with the same lender, this wouldn't apply.(Abbey)

I'd like to reduce my mortgage by the released equity but obviously want to avoid as much of the penalty as possible.

Figures go something like this

Existing mortgage £160,000
Possible released equity £40,000 - 60,000 (say £50,000 for arguments sake)

From memory, I'm allowed to bang in £15K per year with no penalty. So what I was thinking was.

1. Put £15K in immediately I have it. Leave the rest in as efficient a savings account as possible (but without immediate access!!) and use the interest received towards the mortgage repayments
2. Come October , bang another £15K in and continue to do a monthly transfer from savings account of interest into mortgage account
3. Wait a year and repeat the process.
4. By the end of that I should have £5K savings left and reduced the loan amount by £45K (plus repayments) I can then fire the remaining £5K in.

Other option I can think of is 1 and 2 and then just pay the penalty on the £20K straight away and the two years of reduced capital and corresponding interest savings might make it more desirable.

Anyone else done similar or have any thoughts.

Thanks,

pollocmc