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Best way to use lump sum?
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GreenTea365
Posts: 1 Newbie
Hi everyone, I have recently received some inheritance and was aiming to put £50k towards the mortgage, but I'm stuck with how best to do this.
Mortgage is currently £109k with interest rate of 5.04% and the current deal is up in December. Do I put the £50k on now or wait until the deal is up to avoid charges for overpayment? I currently make small overpayments of £200 a month when I can.
Also we are thinking of moving, so would we be best to save it for when moving to reduce the new mortgage?
Mortgage is currently £109k with interest rate of 5.04% and the current deal is up in December. Do I put the £50k on now or wait until the deal is up to avoid charges for overpayment? I currently make small overpayments of £200 a month when I can.
Also we are thinking of moving, so would we be best to save it for when moving to reduce the new mortgage?
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Comments
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The sooner you can apply it against the money you owe the less interest will need to be paid. I would contact the bank and ask how much you could pay against the mortgage now and not have any charges. Possibly it will be 10% of the current value or 10% of the value when the mortgage was arranged. I would pay the max possible and then hold the rest somewhere safe to pay at the renewal date. It's hard to get a saving rate that would beat 5.04% by much.
Thinking of moving might take a while to action. A bit of thinking, trying to find the right place, trying to sell yours etc. Meanwhile interest is being charged on what you owe currently. I wouldn't wait in case it never happens or you start nibbling at it for other things. If spending £20k+ on some reno meant you didn't need to move is another thing and would be a good reason to not plop it on the mortgage.I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe, Old Style Money Saving and Pensions boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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