Mortgage ERC hit or savings

DawnCBUk

Hi All,

I am trying to determine what to do with a 40k lump sum I recently received.

Facts:

•  I am about to take on another (big) mortgage (new relationship and savings goal for flipping a few houses).  Total monthly mortgage payments together are about 1/3 my income.
• I have about 40k left on my personal mortgage and have paid the max of 10% off this year.  It all resets in Sept 24 so could pay another 10k off before my super low 2.84% rate comes up in August 2025 where I could pay it all off. 
• ERC today is about £890
• Let's say best saver for that lump sum is a high interest cash isa @5% (needs to be tax efficient) (so that money could make me about 4k over 2 years).
• Work is a bit unstable (my entire industry) so a bit scared of emptying everything I own. I would have 12 weeks of redundancy plus about 4 months in savings regardless. 
  

Now I am pretty sure I just need an amortisation calculator to show the compound interest I would pay this year versus the ERC of about £890. Can I find one that makes sense to my brain? No
I then can determine based on some decent fixed term cash savers (isas best due to savings interest threshold) if it's worth taking the hit on the erc and getting rid of the biggest debt of my personal life.

Any ideas?  This is as much an emotional as rational decision for me as I am frankly crapping myself at the idea of 2 mortgages.

D

enthusiasticsaver

Personally I would put £20k in an easy access ISA (you can only put £20k per tax year) and stick the other £20k in an easy access saver until you can overpay a further £4k off the mortgage. Repay the whole lot in 2025 with no ERC. You can get around 5% so £2k interest on £40k per year.