Paying off within the 10% limit

Percys_mum

Hi
We have a mortgage with Nationwide, 10 yr fix at 2.09% with 6.5 years to go, current balance is ~£27k and the original loan was £100k so checked with Nationwide and an overpayment of £10k is ok without invoking early repayment fees. So it’s possible to clear the mortgage in 3 years rather than the remaining 6.5, which is quite appealing.
I am aware that savings rates are higher at the moment, the overpayment calculators
are quite basic and only show that it’s better to keep the mortgage and not overpay. However if we make a £10k payment in this year and then after the mortgage anniversary date another £10k then we would only be paying for the remaining £7k for a further year. After the next anniversary we could pay off the lot with no penalty. I checked this with Nationwide Mortgage today and they confirmed that this was possible.
Have I missed something or does this seem to be sensible approach? Is there a calculator (or combination of calculators) available which might help to crunch the numbers? 

TIA

Mark_d

You have a low mortgage rate.  You can easily make more money by saving/investing the money. It makes absolutely no sense to pay off the mortgage earlier than you need to

Percys_mum

Mark_d said:

You have a low mortgage rate.  You can easily make more money by saving/investing the money. It makes absolutely no sense to pay off the mortgage earlier than you need to

Thank you. I wanted to check I wasn’t missing something obvious. I’ve maxed out my ISA and am about to slip into the higher tax bracket which would mean more tax on savings, which is why I was considering this as an option. 

edinburgher

Remember you can effectively bring yourself down a tax bracket via pension contributions, if this would be of interest?

Sarahwithlove

If you are going to go into the next savings bracket then I probably would pay it off. Alternatively have you considered premium bonds? 

Percys_mum

edinburgher said:

Remember you can effectively bring yourself down a tax bracket via pension contributions, if this would be of interest?

About to set this up with my pension scheme. So I am considering a number of options.