A Quandary...

BooJewels

LHW99 said:

Good feelings are nice, but having 3 years left to go on a fix probably means there will be a penalty for early repayment. May not be much, but if there's no need to pay it, I (personally) wouldn't.

I would certainly do as suggested above and put £17k into a 3-year fix, so there's no temptation to spend what you need to use in future to pay off the mortgage.

The point I was eluding to was perhaps the reason for a critical illness pay out precludes longer term plans being as appropriate as they might otherwise be.  In normal circumstances, a 3 year fix at five times the interest rate of a fixed mortgage would be a no brainer - if your ability to work and future income etc. was predictable.  My husband only lived 18 months after getting his critical illness payment - so that might have left me with a mess to sort out and Probate to apply for etc.  Only the OP knows what their immediate future holds in that respect - which must be a factor in their decision making.

jimjames

BooJewels said:

 Plus, our mortgage payments had been a significant part of our monthly outgoings and that in turn meant when he wasn't sure he wanted to continue with full time work, we could afford for him to go part time, as our expenses were pretty much halved without the mortgage payments.  Then when he wasn't really well enough to work, it meant we could manage on the benefits he then qualified for - it would have been very difficult with the mortgage still in place.

Sorry to hear about your husband but with the mortgage in place and the savings to cover paying it off in one go but used monthly instead would have been exactly the same situation as paying it off completely. The benefit would be the much higher interest payments you earn plus not paying the ERC on the mortgage so I don't see how that decision about working would have been difficult.

BooJewels

jimjames said:

BooJewels said:

 Plus, our mortgage payments had been a significant part of our monthly outgoings and that in turn meant when he wasn't sure he wanted to continue with full time work, we could afford for him to go part time, as our expenses were pretty much halved without the mortgage payments.  Then when he wasn't really well enough to work, it meant we could manage on the benefits he then qualified for - it would have been very difficult with the mortgage still in place.

Sorry to hear about your husband but with the mortgage in place and the savings to cover paying it off in one go but used monthly instead would have been exactly the same situation as paying it off completely. The benefit would be the much higher interest payments you earn plus not paying the ERC on the mortgage so I don't see how that decision about working would have been difficult.

It was 3 years ago, so interest rates weren't what they are now - I think the mortgage was 4.7% and savings earned a bit under 2%. Plus, our mortgage payments were disproportionately high after a snaffoo by the lender and an endowment shortfall.  A quick tot up would suggest that monthly we'd have earned about 10% of the mortgage repayments in interest. Plus, I already said the ERCs were waived because the mortgage was repaid by a critical illness settlement. They then reimbursed the insurance payments back to the day we requested the forms (it had all taken some time to settle) and the interest we'd paid since the same date.   As we'd taken level term insurance, we did still have about half of the lump sum to supplement our income.

I'm sorry that you feel it necessary to question what I'd posted and that you 'can't see' why we took that decision.  Maybe in today's market, it might well be different.  If nothing else, it gave my husband enormous comfort to know we'd secured my future home, when everything else was so uncertain.