Clearing mortgage with lump sum

seans_elysees

Posted this on Reddit, but not much traction… just wondering if I’ll get any other thoughts/comments on here as my more preferred go-to for finance info…:




I’ve read a few threads about paying off mortgage, but just checking that I’m not missing anything before I go ahead with clearing my mortgage this week. 

There’s a few variables in my scenario but I think it’s still a straightforward enough decision that makes sense to clear my mortgage.  Context: £72k mortgage, £90k lump sum. 42(m). 

Specifics: 

- Mortgage has tipped into SVR within last year, currently 6.75%. Unlikely to get anywhere near that with short term savings rates. 

- I’m likely to sell within the next 6 months so no prospect of moving to lower SVR before then. 

- Savings and remainder of lump sum will fund any short-term home improvements to prep for market. 

- 4-6 month emergency fund covered. 

- I still have £10k outstanding personal loan @ 5% APR, and approx £2.5k 0% credit card debt. 

Anything else I need to consider? 

TIA

tacpot12

I'd be careful about spending money on home improvements. Even redecorating in neutral colours is only worth it if the current decor is garish.

You should be looking to clear the personal loan with the excess from the lump sum. Clearing your mortgage is sensible with that SVR rate. The only reason to not clear it completely is if you want to borrow more money to move and you think your current lender might have the deal you want. 

seans_elysees

tacpot12 said:

I'd be careful about spending money on home improvements. Even redecorating in neutral colours is only worth it if the current decor is garish.

You should be looking to clear the personal loan with the excess from the lump sum. Clearing your mortgage is sensible with that SVR rate. The only reason to not clear it completely is if you want to borrow more money to move and you think your current lender might have the deal you want. 

Thanks.  I maybe used the wrong term in saying home improvements. It’s more of a tart up so that it’s move in condition. The flat is in desirable catchment for Glasgow Uni and flats are often snapped up by rich non-local parents falling over themselves wanting something for their kid during uni (and as investment). Quite often it will get quite a premium by making it reasonably presentable.