Pay off some of mortgage?

modelreject

Hi everyone.

I have a mortgage fixed at 4.7% until next year. £37000 to pay off. I can overpay 10% now, which is £3700.

I have £17000 savings in ISA about to mature. I have option to reinvest at percentage of 4.25%.

I assume, at this stage, it is better for me to overpay my mortgage?

Thanks

Hoenir

You are better off paying down the mortgage. 

modelreject

If I was able to pay off mortgage with early repayment fee of £680 would that be worth doing?

Hoenir

 No. You'd be better off paying more off the mortgage once the current product term ends. 

Archerychick

As Hoenir say, pay your 10% allowance now, save the rest for when your fixed term ends and make a lump sum payment then to pay down the mortgage. Make sure you don’t lock away your savings for it beyond your mortgage fix end date

dimbo61

Well done on saving £17,000 in tax free ISA,s 
Yes it's always a  good idea to pay down your mortgage 
However we know nothing about you !
Age, Income, Savings. JOB, investments, Equity  and debts ( No just mortgage )
Can you put more into the pension ?
Will your employer match any extra contributions  ?
How old is your home ?
It might need a new roof, boiler or windows and £17,000 cash savings might come in handy if you need that new car, nice holiday  etc
Little difference between savings rate and mortgage rate.
We are working towards Mortgage Free asap 
Your decision 

modelreject

Quite lucky. No debts. Made a few good investments, so have enough money set aside. Wary of locking away for too long. Atom has good 6 month savings rates, but, in my situation, no matter where you put your savings there is little money to be made because of high interest rates and taxes. Investments is the only route to making money go further. Ideally bank/ISA interest rates would have to be at least 6.5+ to really make a difference, but that just isn't going to happen. Any money saved is eaten by taxes and inflation at the moment. 

Going to overpay and next year with further investments. pay off mortgage and have some extra money...hopefully.

jrawle

You can currently get 5% on a cash ISA, which will beat your mortgage rate. Don't settle for 4.25% from your current provider. Then the decision is easy.

modelreject

So. I have been looking around. I will have a couple of months after interest maturity on whatever account I open to save money in (moreso for fixed rate interest accounts)

Would you recommend Moneybox Cash ISA https://www.moneyboxapp.com/cash-isa? Anyone any experience ith Moneybox? I was going to transfer £17000 from current ISA once matured and add £20000.

With Atom Bank at moment too and was going to invest in their fixed rate 5% https://www.atombank.co.uk/fixed-saver.

So the Moneybox ISA would allow me to get emergency funds out if I need it but good interest rate. I have some emergency funds anyway so shouldn't be issue.

Sound decent enough?

Also, as well as upping my pension payments does adding £20000 a year to ISA (if good enough interest rate) sound like a smart way to use my money. The mortgage will be paid off next year hopefully.

Thanks once again.

jrawle

I have no experience of Moneybox, but I can't see any issues with it, as long as you are happy banking with a mobile app. It's FSCS protected. If the ISA rate expires a couple of months before your mortgage deal, you can always pay the mortgage off then (subject to any terms, ERCs, etc.)