Proceeds from house sale

Billozz662 · 25 January at 9:27AM

I'm just completing on the sale of a house. I am moving into the other house I own which I have been renting out, this house has £140000 mortgage on it. I will clear 240000 on the sale.
This might be a stupid question but should I pay the mortgage off? Or would the interest I'd get off set the mortgage.
Either way any advice on where to put the balance off the proceeds from the house.
Thanks very much

Keep_pedalling · 25 January at 9:40AM

It would help if you told us more. What is the interest rate you are currently paying? When is it up for renewal? Any penulties for paying it off early?

Alexland · 25 January at 10:18AM

So much depends on your circumstances such as if your existing mortgage rate/penalties means it can be easily beaten by cash savings for now and what you would otherwise do with the money (eg save/invest) if you did want to try and generate a return higher than the mortgage rate. The problem with that scale of money is that it cannot be quickly wrapped into tax efficient wrappers such as ISAs and pensions due to annual contribution limits so you may find the potential tax implications causes it to be better to pay off the mortgage.

Brie · 25 January at 3:09PM

I'd definitely be calculating what the penalties might be for early payment and how much might you save/make on the differnce in interest. If the mortgage is 1% and you can get 4% somewhere then put some into savings. Maybe put some in Premium Bonds. If there's zero penalty and your interest is 5% I'd pay it off asap.