Mortgage Redemption Quote

kassy64

Hi, I have the funds to pay off my small mortgage, but I am still in a fixed rate period with HSBC at 1.04% for next 16 months.
With online banking I can get regular redemption quotes and the early repayment charge is roughly the same as the interest over the next 16 months. The redemption quote states the following-
Daily interest added = £1.16
ERC reduces by daily = £1.10
So, am I right in thinking that if I pay off the mortgage and pay the ERC I will gain 6 pence per day over the next 16 months, about £30 by my reckoning.
Or, keep the funds and put into a fixed savings a/c and get some interest on the capital that is to be used to pay off mortgage (about £42k) in 16 months time.
Hope this all makes sense.

K_S

@kassy64 In your place I'd put the funds in a market-leading 1 year fix (currently 3.35%) rather than overpaying a mortgage fixed at 1.04%.
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

Even if you've to pay 20% tax on the interest, you'd still be quids in.

kassy64

K_S said:

@kassy64 In your place I'd put the funds in a market-leading 1 year fix (currently 3.35%) rather than overpaying a mortgage fixed at 1.04%.
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

Even if you've to pay 20% tax on the interest, you'd still be quids in.

Thanks for the advice K_S.
Yes, that sounds like the way to go. When I re-mortgaged at that low rate I was expecting to be working a few more years and would not have access to my pension/lump sum so early as I have. I have since decided I'd had enough of work after 40 years so took early retirement at 58.

Fighter1986

kassy64 said:

K_S said:

@kassy64 In your place I'd put the funds in a market-leading 1 year fix (currently 3.35%) rather than overpaying a mortgage fixed at 1.04%.
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

Even if you've to pay 20% tax on the interest, you'd still be quids in.

Thanks for the advice K_S.
Yes, that sounds like the way to go. When I re-mortgaged at that low rate I was expecting to be working a few more years and would not have access to my pension/lump sum so early as I have. I have since decided I'd had enough of work after 40 years so took early retirement at 58.

What a wonderful position to be in. Good for you. Quite right. 

kassy64

Fighter1986 said:

kassy64 said:

K_S said:

@kassy64 In your place I'd put the funds in a market-leading 1 year fix (currently 3.35%) rather than overpaying a mortgage fixed at 1.04%.
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

Even if you've to pay 20% tax on the interest, you'd still be quids in.

Thanks for the advice K_S.
Yes, that sounds like the way to go. When I re-mortgaged at that low rate I was expecting to be working a few more years and would not have access to my pension/lump sum so early as I have. I have since decided I'd had enough of work after 40 years so took early retirement at 58.

What a wonderful position to be in. Good for you. Quite right. 

It is, especially as I have worked shifts all my working life, and in the last few years the very early starts, lates and some night shifts was taking it’s toll on me. I got out with a decent civil service pension and lump sum, and already feel better health wise (minor back niggle and a weak knee from a lot of standing have improved already). 😀