Pay off mortgage or save

paulalawson

Hi 
Currently have 21, 000 left of mortgage to pay at 3.44% this interest rate ends oct 2027 and the remaining term is 3 years 4 months. We pay £576 a month and have been paying over payments too,
We have a fixed isa that finishes next month and will cover that amount with a little change, is this the best thing to do??? We will be charged £1,200 to do this as early repayment.
This will leave us with about the same amount left in savings, plan would be pay off and build savings again.
Any advice welcome 🙏 

Sarahwithlove

No I would pay off the maximum for your annual overpayment allowance and then save the rest again. Why give them £1200 in fees if you don't have to? I cant see you saving enough in interest on the mortgage to make it worth while. When would you be able to clear it without an early repayment fee? 

paulalawson

My husband is off sick waiting for a knee replacement so money is tight, we thought it would help as would free up the £575 per month,  

Sarahwithlove

I'd pay the maximum overpayment for the year to reduce amount of interest you pay each month. Then I'd pay the £575 a month from the savings whilst still getting interest for the remaining balance. You also save the overpayment £1200 charge as well and stil free up some of your income. 

Sarahwithlove

I assume in October your overpayment allowance for the year resets so you can make another 10% overpayment? Then from 2027 you can just clear the remaining balance when your fix comes to an end. 

paulalawson

Thank you Sarah