Another post on fixed rates in light of recent news

MrDarcy1815

We've currently got a 5 year fixed rate mortgage at 1.99% with Nationwide, with 1.5 years to run on the fix. And 21.5 years until paid off.

We're paying £800pm.

According to Zoopla our house is currently worth £280k.

We currently have £169k outstanding on the mortgage.

The ERC is currently £3.3k

Overpayments are a max of £18.3k a year.

We are in the final weeks(?) of the sale of an inherited property which will give us approx £260k after fees.

We are(were?) hoping to use some of the inheritance to do up the house, save for the future etc.
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With the recent interest rate news that seems to have triggered 101 questions here similar to ours, we are trying to decide on the best course of action.

1) use inheritance to pay off the mortgage completely. Either now or in 18 months time.

2) overpay x2 in the 18 months left and see where rates are then, with the possibility of paying a lump-sum towards the mortgage when remortgaging onto a new fixed rate at that time.

3) eat the ERC and put a new fix in place now, possibly paying off a chunk of the mortgage with the inheritance while doing so.

Any thoughts?

Ballymoney

I’m no expert but if it were me I would 100% sit tight on your existing mortgage, put the expectant £260k in a saving account that hopefully earns more than the 1.99% of your mortgage, then pay the lot off as soon as you are out of your fixed rate. 

You’re in a very luxurious position. Sit back and enjoy it.

MrDarcy1815

Ballymoney said:

I’m no expert but if it were me I would 100% sit tight on your existing mortgage, put the expectant £260k in a saving account that hopefully earns more than the 1.99% of your mortgage, then pay the lot off as soon as you are out of your fixed rate. 

You’re in a very luxurious position. Sit back and enjoy it.

Would you do any overpayments on the mortgage while the inheritance is hopefully building interest?

Ballymoney

MrDarcy1815 said:

Would you do any overpayments on the mortgage while the inheritance is hopefully building interest?

If the inheritance is earning more than 1.99% then no. If it’s earning less than 1.99% then yes, you’d be better off making the £18k overpayment.

But this is purely what I’d do and in no way financial advice 😊