Use premium bonds to pay a lump sum off mortgage?

IAMIAM

I currently have approx 30k sat in premium bonds as my instant access emergency type fund which earned me £250 across the last year. My mortgage rate is practically going to double when I renew.

Contemplating putting the 30k into my mortgage to get to 60% LTV and if emergency arises, use 0% card etc until rates settle and then I may take some out of the mortgage then.....thoughts? With criteria becoming increasingly tighter, is it worth keeping hold of the 30k instead?

simon_or

If your current rate is 1.6% or lower, you could just put it in one of the saver accounts and use it if needed to lower your loan size when it comes to remortgage time.

IAMIAM

my rate is 1.44 now, but will be 3-3.5% probably by this time next year. If I was to remortgage now, the rates are 2.79 with a 2% ERC on 165k

simon_or

At that rate, I'd just put it in a Virgin or Chase saver so I'm saving the same interest that I would if I overpaid while still having access to a rainy day fund.

If you really value the peace of mind of fixing now, then perhaps think about swallowing the ERC and remortgaging.

To keep your options open you could take out a remortgage offer now with a validity of 6 months and then make a call in 5 months time whether to complete or not.

raf300

simon_or said:

At that rate, I'd just put it in a Virgin or Chase saver so I'm saving the same interest that I would if I overpaid while still having access to a rainy day fund.

If you really value the peace of mind of fixing now, then perhaps think about swallowing the ERC and remortgaging.

To keep your options open you could take out a remortgage offer now with a validity of 6 months and then make a call in 5 months time whether to complete or not.

This is a really good answer. 

Especially Remortgage offer validity of 6 months and can decide later to complete or not 

thegentleway

You could spend next 6 month building emergency fund so you can put £30k towards your mortgage and not leave yourself exposed.

diystarter7

No matter what you do, keep several K's back. I'd not be comfy with less than 10k in cash/PB's etc and have not had less than 10k in cash etc for as long as I can recall since buying our first house.

IAMIAM

diystarter7 said:

No matter what you do, keep several K's back. I'd not be comfy with less than 10k in cash/PB's etc and have not had less than 10k in cash etc for as long as I can recall since buying our first house.

Agree with this....