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Overpay mortgage or save to earn
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Holiholi
Posts: 7 Forumite

I have 2.5 years left on a 5 year fixed mortgage on 0.99% interest (£180k remaining).
Last year I inherited £100,000 and wonder whether to overpay 10% of the mortgage for the remaining 3 years or whether I’d be better off putting it all in a high interest bank account and earning £ on interest to pay off in bulk when fixed term ends. I currently have it in 2 ISAs and have just gone into the higher rate tax braket.
Grateful for any advice
Grateful for any advice
0
Comments
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I would put £50k into a 5% savings account and £50k into stocks and shares.
Im very similar to you as I have 2.5years left at 1.25% and thats what im doing, ive split it 50/50 as I should be better off overall when im due for mortgage renewal1 -
Even if you at 40% tax rate then 5% becomes 3%, which is still better than 0.99%.
I'd put £50k into Premium Bond, if you have partner/child then another £50k there - average return is just over 3%, if not then saving account and shift to ISA next year.
I assume you've used your (your partner if you have) ISA allowances.0
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