To pay off mortgage or save deposit for house

Hello I bought a small leasehold 5 years back. My mortgage ends in 2026 with current rate of 1.72% fixed. I just checked now its insane nearing 7%!!!!

i'm actually a little scared about how much it will be when i come to remortgage. 
I'm wasnt looking to sell because rental yield is O.K but only because of such low rate. It will drop when I remortgage 

I'm not sure what to do when my mortgage ends because I want to buy a house with my partner and start a family but also I want to keep this flat for when my mum retires. Shell only get state pension which gives her peanuts. Im planning in future to either move her into my flat so she can rent out her house. Or to take proceeds for my flat as her income. Either way keep it to help her with living costs.

I've got a few diff options and not sure what to do since the mortgage rates are so high I'll be paying 2 mortgages when we get the house 

Not sure to

1) pay it off completely. I think mortgage will have about 80K left . Which means ill need to skrimpt an extra 25K extra for 5% (my half) of house deposit but then it will be a super low deposit i.e 10% total which means higher interest rates. But I won't worry about 2 mortgages
2) or remortgage leasehold as an interest only repayment ... which I'm looking is still supr high 4-5% and then use ALL my savings for deposit for a other house so interest rates are lower. I.e have like a 30% deposit but then it means not pay off the flat at all so that interest rate gonna be crazy.

Any guidance.on how I can decide or calculate the best thing to do? Obvy it's hard to predict interest rates in future as now is so high but I wanna be prepared for the worse.



  • gwynlas
    gwynlas Posts: 1,622
    First Post First Anniversary Name Dropper
    You bought a lease on what? Are you living there or letting it out? How long is it until your mother retires? Are you thinking of transferring to a buy to let mortgage? Will it stack up in terms of affordability? There are restrictions on letting to family. Would mother sell her current property and downsize?
  • Leasehold studio flat. I was living it myself but i ended up moving in with my partner so am temporarily renting it out until i figure out what to do.
    My mum retires in 2 years and I did not know about the rule about renting to family. I guess people can get out cheap mortgages this way.. The thing is I wouldn't be charging her does that still matter? 

    I can't afford 2 residential mortgages on my salary. Thats why i thought of either paying off the flat compeltely OR having the interest-only buy to let one. This rules out possibility of a buy to let mortgage on it then if she cant live in it then :(  I think it answers questions to pay off the flat and save up another deposit for our house 

    And no she wouldn't sell her properly as I think she will make significant losses as we got it with "Right to buy". She could sell it in the future to help retire more 'comfortably' though but downsizing would be moving into my flat since i have it already and it is perfect size for her especially when she ages she would be less able to upkeep a whole house. In a studio there's less maintenance and cleaning involved and everything is within easy reach (kitchen, toilet, bedroom etc) 


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