Pay off morg, or keep saving?

MrMrMr

Got 3yr left, around £25'000 left, coming to end of a fixed which was low % had brief look, it would go up by about £40/month if remortgaged. 

No CC or other debt, apart from PCP car, savings would cover paying off, and leave around 10K, could then start saving again to boost back up. Plan to work for another 3-5yr at least, then work pension.

Not sure how much interest would pay over the new mortgage of 3yr, and if worth it. I presume I would be allowed to just pay all of mortgage as it's end of current deal, I know normally you can overpay by 10%, but at the end of a deal, a potential new mortgage can you just say, I'd like to pay off please instead.

Grumpelstiltskin

When does  the fixed deal end?

MrMrMr

Grumpelstiltskin said:

When does  the fixed deal end?

In a couple of months

Grumpelstiltskin

MrMrMr said:

Grumpelstiltskin said:

When does  the fixed deal end?

In a couple of months

So have you checked what the new rate will be?

MrMrMr

Grumpelstiltskin said:

MrMrMr said:

Grumpelstiltskin said:

When does  the fixed deal end?

In a couple of months

So have you checked what the new rate will be?

Yes, as above, in real terms about £40 more than I pay now, but that's not really the question.

born_again

How much a month would you be saving by not having a mortgage?

MrMrMr

born_again said:

How much a month would you be saving by not having a mortgage?

Around £600/month, but obviously less savings, so ideally need to build back up

Brie

Your numbers don't make sense to me.  

You seem to be saying that your monthly payments are currently £600 as this is the amount you would save in the future.  You also say that your payments on remortgage would go up by about £40, so £640. 

If you have £25k to pay off and are paying £640 a month even at zero % you wouldn't have paid the whole amount off in the 3 years remaining.

So obviously something is wrong somewhere.  

What needs to be done is to clock what the new interest rate would be to give you the amount that you would need to pay monthly to clear the £25k in the next 3 years.  Then balance that against what rate you'll get in a savings account.  Basically if your savings % rate is higher than your mortgage rate then you should hang on to your savings.  If the mortgage rate is going to be higher then chuck your savings at it and start building up your savings again.  

MrMrMr

Brie said:

Your numbers don't make sense to me.  

You seem to be saying that your monthly payments are currently £600 as this is the amount you would save in the future.  You also say that your payments on remortgage would go up by about £40, so £640. 

If you have £25k to pay off and are paying £640 a month even at zero % you wouldn't have paid the whole amount off in the 3 years remaining.

So obviously something is wrong somewhere.  

What needs to be done is to clock what the new interest rate would be to give you the amount that you would need to pay monthly to clear the £25k in the next 3 years.  Then balance that against what rate you'll get in a savings account.  Basically if your savings % rate is higher than your mortgage rate then you should hang on to your savings.  If the mortgage rate is going to be higher then chuck your savings at it and start building up your savings again.  

I have saved up 25k plus extra so have an opportunity to pay off my mortgage that has 25K left to pay.

My current fixed rate finishes soon, so was wondering wether to pay mortgage off, or not with the savings 

Currently pay around £600 so obviously if not paying that to a mortgage I could save that money? If I don't the rates with current mortgage would go to about £640 for next 3 years.

Not sure what other info to give? Pay off mortgage then build savings back up, or don't 

Altior

It's pretty marginal either way and down to your personal preference I'd say. 

All other things being equal, it comes down to if you can achieve a higher rate for savings than the mortgage interest rate. Generally they are pretty close to parity after the latest BoE reduction. 

My personal preference is to have access to my assets, so I would swing that way and retain access to liquid cash, many others seek out the 'mortgage free' tag asap. As it seems you are quite close to accessing pension I would look to churning the cash into pension whilst you're still working. Even better, effectively doing that via SalSac (if that's an option).

MrMrMr

Altior said:

It's pretty marginal either way and down to your personal preference I'd say. 

All other things being equal, it comes down to if you can achieve a higher rate for savings than the mortgage interest rate. Generally they are pretty close to parity after the latest BoE reduction. 

My personal preference is to have access to my assets, so I would swing that way and retain access to liquid cash, many others seek out the 'mortgage free' tag asap. As it seems you are quite close to accessing pension I would look to churning the cash into pension whilst you're still working. Even better, effectively doing that via SalSac (if that's an option).

Good idea on pension! We are allowed to put in AVC, and I'm lead to believe that's it's tax free, so a good way I suppose.

I could put half in pension, half into savings suppose if paid it off.

I agree it's nice to have the money in an account, I know the mortgage will be paid off soon anyway so it's not really a worry. I'm not sure how to work out how much interest I'd actually pay to get an idea though. I'm also not sure at the end of this fix that I can opt to just pay off all of mortgage as erll