3 options for mortgage

Mish_Mash

Hi, I have a decision to make regarding my mortgage and would appreciate some help. 

I am currently on a interest only tracker mortgage. It’s is 0.9% above the Bank of England base rate. It has 15 years to run. It was 180k but I have paid it down to 145k over the last 18 months. I am very happy with the mortgage and like the flexibility to be able to pay it down without penalty. I also like the fact that should I experience difficult times ahead then the payment I am obliged to meet is minimal as it is interest only (currently £275 but moving to £320). 

I am targeting to pay off the mortgage in 5 years by making regular overpayments from my salary. However I am worried now that with interest rates rising I might find myself paying more and more in interest and not repaying the loan itself.

As such I am thinking of moving to a fixed rate mortgage to provide me with some certainty on the repayments.

I have 2 mortgage offers. Both 10 year fixed. 

A first direct mortgage at 3.39 which allows unlimited overpayments subject to not paying off the mortgage before the fixed period ends. It has a 3% moving to 2% early repayment fee. It is a repayment mortgage. Fees are £420

I also have a 10 year fixed rate Halifax offer at 3.49 which limited repayments to 10% per year and it has a hefty early repayment penalty starting at 6% -  2%. It has a fee of £999. It is interest only. 

I should highlight that I have saved the money to repay the whole mortgage. It is currently invested and making a reasonable return through dividends.I am trying to leave this money to one side in case I need to leave work because of redundancy, ill health or due to caring responsibilities (I am currently caring for my elderly parents and aunt, 2 of whom have dementia and 1 who has severe disabilities.)

I am 48, single with no dependents,  I have a final salary pension payable at 60 and it should be worth between 35-40k per annum. If needs be I can repay the mortgage using my tax free lump sum. I am also saving into other schemes with a view to building a lump sum including pension AVC’s. And if I lose my job through redundancy I should get approx 80k. So basically I have a number of options to manage my finances. 

In light of the above what would you do. Stay on current mortgage and risk rate increases, fix to first direct or Halifax?I think my preference is to either remain in the current mortgage or move to first direct because of the flexibility of their mortgages. But I do like the fact that the Halifax is fixed interest rate and is interest only which allows me a little breathing space if things get tight. 

Or would you just pay the mortgage off? 

I feel under pressure to make a decision due to the state of the economy and I would really appreciate some help. Thanks in advance.