We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Paying mortgage or save
Options

V3cash
Posts: 296 Forumite

We have been really fortunate to have been left some money so we are looking at paying off mortgage.
however my mortgage interest is lower than savings and I have 2 years left.
interest 2.79%
however my mortgage interest is lower than savings and I have 2 years left.
interest 2.79%
Redemption about £1400 on mortgage.
i know it is sensible to save the money instead but even if we put max £ into ISA’s we will still then go over threshold and pay tax on savings.
we won’t get money until after April so can’t use the potential 2 lots of ISA’s
each.
i did input figures into martins calculator but I’m not sure if the boxes you tick for tax on interest works as nothing changed on my results, it said I’d be £250 better off if I saved for a year rather than pay it off.
i know it is sensible to save the money instead but even if we put max £ into ISA’s we will still then go over threshold and pay tax on savings.
we won’t get money until after April so can’t use the potential 2 lots of ISA’s
each.
i did input figures into martins calculator but I’m not sure if the boxes you tick for tax on interest works as nothing changed on my results, it said I’d be £250 better off if I saved for a year rather than pay it off.
2025-26 MFW Target #68 £13,500
£378.07 left OP 10% allowance left
Mortgage free Aim July 2027.
July 25 £57,000, £56950
August 25 £56,400
house improvement/emergency budget/holiday fund needs topping up.
0
Comments
-
Yeah I wouldn't pay off the mortgage until the fix ends due to the early redemption fee..
Unless you end up in the 40% tax bracket then even paying 20% tax on any savings interest outside the ISA should be able to still beat 2.79%
Assume there is 2 of you so you can open an ISA each, there's £40k.
If you are both 40% tax payers then it may be worth seeing how much you can pay off the mortgage without penalty (most allow 10% a year, check the terms)1 -
Veteransaver said:Yeah I wouldn't pay off the mortgage until the fix ends due to the early redemption fee..
Unless you end up in the 40% tax bracket then even paying 20% tax on any savings interest outside the ISA should be able to still beat 2.79%
Assume there is 2 of you so you can open an ISA each, there's £40k.
If you are both 40% tax payers then it may be worth seeing how much you can pay off the mortgage without penalty (most allow 10% a year, check the terms)
Overpayment would be an option. It’s just 10% and i have already been overpaying a bit so i will call and see how much is left of allowance.
I have car on finance but it’s 0% so that won’t even be useful either but i will pay that off in February when term ends.
i don’t have other debts apart from 0% credit card so that’s not even worth paying 😕
Barclaycard £5800 (0%) ends April 26.
2025-26 MFW Target #68 £13,500
£378.07 left OP 10% allowance left
Mortgage free Aim July 2027.
July 25 £57,000, £56950
August 25 £56,400
house improvement/emergency budget/holiday fund needs topping up.0
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 351.2K Banking & Borrowing
- 253.2K Reduce Debt & Boost Income
- 453.7K Spending & Discounts
- 244.2K Work, Benefits & Business
- 599.2K Mortgages, Homes & Bills
- 177K Life & Family
- 257.6K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards