Fixed Rate Ending

GaryW5491

Hi, I'm looking for some ideas and/or advice please. Our fixed term mortgage ends in September at which point we will still owe approx' £85k. In the background we have saved approx' £75k so my first question is; are we right in assuming that at the end of the fixed term we can pay a lump sum of £75k without any penalties? My second question is; what is the best and most cost effective approach to take with regard to the remaining £10k. We are lucky enough to be in a healthy financial position with a stable monthly income and want to clear the remaining £10k as soon as possible with minimal interest if possible. Thanks

Futurehopeful

GaryW5491 said:

Hi, I'm looking for some ideas and/or advice please. Our fixed term mortgage ends in September at which point we will still owe approx' £85k. In the background we have saved approx' £75k so my first question is; are we right in assuming that at the end of the fixed term we can pay a lump sum of £75k without any penalties? My second question is; what is the best and most cost effective approach to take with regard to the remaining £10k. We are lucky enough to be in a healthy financial position with a stable monthly income and want to clear the remaining £10k as soon as possible with minimal interest if possible. Thanks

We are in a similar position to you, (fixed rate mortgage ends in December, 60k left and have 60k savings)
I believe you can clear 75k since your fixed term will have ended but I am reluctant to spend my savings on paying off my mortgage and am considering offsetting by 100% so I no longer pay mortgage interest. This gives me the insurance that should unexpected issues arise I still have my savings available to use.
Spending 75k may not be an issue for you if you have other funds available should you lose your job etc but worth bearing in mind?

Thrugelmir

GaryW5491 said:

Hi, I'm looking for some ideas and/or advice please. Our fixed term mortgage ends in September at which point we will still owe approx' £85k. In the background we have saved approx' £75k so my first question is; are we right in assuming that at the end of the fixed term we can pay a lump sum of £75k without any penalties? My second question is; what is the best and most cost effective approach to take with regard to the remaining £10k. We are lucky enough to be in a healthy financial position with a stable monthly income and want to clear the remaining £10k as soon as possible with minimal interest if possible. Thanks

Are you overpaying now up to the limit ? 

Select a product with no early repayment penalties and pay as much as you can afford every month. Minimising the amount of interest payable is totally down to you.

Alternatively shorten the mortgage term to say two years and lock in to another fixed rate product. 

K_S

GaryW5491 said:

Hi, I'm looking for some ideas and/or advice please. Our fixed term mortgage ends in September at which point we will still owe approx' £85k. In the background we have saved approx' £75k so my first question is; are we right in assuming that at the end of the fixed term we can pay a lump sum of £75k without any penalties? My second question is; what is the best and most cost effective approach to take with regard to the remaining £10k. We are lucky enough to be in a healthy financial position with a stable monthly income and want to clear the remaining £10k as soon as possible with minimal interest if possible. Thanks

@garyw5491 If it is an option, you could also consider a product-transfer/product-switch/rate-switch to a no-fee no-ERC tracker/discount product (if your current lender offers one), opt for it to kick in as early as possible (some lenders will allow you to switch products 2-3 months before the end of the fix) and pay off the 75k and keep overpaying until it's paid off.

dimbo61

If you have the £75,000 available to Overpay as soon as your fix ends you will only owe £10,000 so even if you go onto the SVR you will pay little interest IF you can pay off the debt ASAP.