Lump sum - existing mortgage or wait?

am123

Hi all, I’m looking for some advice as I can’t decide what is best to do, 
I have a mortgage for £150,000 on a fixed rate of 1.62% ending next October. 

I had a decent chunk of redundancy money (£75,000) a year ago which I’ve had in an ISA, so crap interest rate. 

I’m hoping to look to move house in the next year or so, just something a little bigger. 

I don’t know whether I should keep my redundancy money to put towards a deposit when moving house (I believe we currently have around 100k in equity on our house now), or pay off a chunk of my existing mortgage while the rate is still at 1.62% (I’m aware there are overpayment fees so would have to factor that in). I have tried doing the maths but it’s so confusing. Would anyone be able to help with which is the most sensible option? 

Brie

Surely there must be a way to get more than 1.62% between now and next October?  I've seen news about savings accounts at 5% and that would make a big difference on £75k.  

am123

1.62% is my mortgage. My ISA is 0.25%! 

If I move it to another ISA, the best I can get is 3.2%. I don’t want to fix my savings in case something crops up and I need the cash out. I didn’t know whether it’s better to have more equity in my existing house. 

housebuyer143

am123 said:

1.62% is my mortgage. My ISA is 0.25%! 

If I move it to another ISA, the best I can get is 3.2%. I don’t want to fix my savings in case something crops up and I need the cash out. I didn’t know whether it’s better to have more equity in my existing house. 

There are instant access savings at 2.6%, 12 months fixed at 4.6%. Get a few different accounts and make interest. Not sure why you would keep it on an account paying 0.25%

am123

The reason I put it in an ISA was because of the tax allowance. I know I can put it in another account at 3.2%, but I wasn’t sure if that was a better option than using it to pay off half of my mortgage 

housebuyer143

am123 said:

The reason I put it in an ISA was because of the tax allowance. I know I can put it in another account at 3.2%, but I wasn’t sure if that was a better option than using it to pay off half of my mortgage 

Not at the rate your mortgage is..100% better to get 4% for it.

am123

housebuyer143 said:

am123 said:

The reason I put it in an ISA was because of the tax allowance. I know I can put it in another account at 3.2%, but I wasn’t sure if that was a better option than using it to pay off half of my mortgage 

Not at the rate your mortgage is..100% better to get 4% for it.

I was trying to think ahead, as come next October, my mortgage is likely to double in %, given what’s happened recently. So wondered if I should bring it down as much as I can now to avoid such a sudden jump next October. That’s where I was coming unstuck using the overpayment calculators, 

housebuyer143

am123 said:

housebuyer143 said:

am123 said:

The reason I put it in an ISA was because of the tax allowance. I know I can put it in another account at 3.2%, but I wasn’t sure if that was a better option than using it to pay off half of my mortgage 

Not at the rate your mortgage is..100% better to get 4% for it.

I was trying to think ahead, as come next October, my mortgage is likely to double in %, given what’s happened recently. So wondered if I should bring it down as much as I can now to avoid such a sudden jump next October. That’s where I was coming unstuck using the overpayment calculators, 

No, put it all in savings and then pay it into the mortgage when the fixed rate ends. 

rjmachin

Virgin Money have a easy access cash isa at 3% interest.

To be able to move your money, you will need to request with Virgin Money that they transfer you current ISA over to them, rather than withdrawing the money and depositing it in the new one

jrawle

am123 said:

1.62% is my mortgage. My ISA is 0.25%! 

If I move it to another ISA, the best I can get is 3.2%. I don’t want to fix my savings in case something crops up and I need the cash out. I didn’t know whether it’s better to have more equity in my existing house. 

Even if you just move it to the ISA you found paying 3.2%, you'll make about £1000 profit by the time your current mortgage deal ends. Then you can decide what to do based on the interest rates available at the time.

am123

Thank you all, I shall move my ISA!