Advice

Jessy07

We have recently had a critical illness payment. However, payment doesn't cover the full mortgage. 

Owe around £90,000 on the mortgage. 9 years 11 months. Will still owe £30,000 after paying credit cards. 

In a fixed deal till Feb 2027. 

I'm not sure what the best way forward is due to Early Repayment Charges. 

MattMattMattUK

Jessy07 said:

We have recently had a critical illness payment. However, payment doesn't cover the full mortgage. 

Owe around £90,000 on the mortgage. 9 years 11 months. Will still owe £30,000 after paying credit cards. 

In a fixed deal till Feb 2027. 

I'm not sure what the best way forward is due to Early Repayment Charges. 

Are you able to give a little bit more info? Who is "we", you and a partner, will the partner not getting the payout continue working?

When you say the payment does not cover the mortgage is that due to using some of it to cover the credit card debt, were you under insured, something else?

MWT

Would be good to know the interest rate on the fixed mortgage deal as well...

El_Torro

It's unlikely to be a good idea to pay the Early Repayment Charges. If your priority is to pay off the mortgage ASAP then pay as much as you can now, while avoiding the ERC. The rest of the money can go into a savings account and be put into the mortgage between now and when the term ends in Feb 2027. It should be possible to overpay as much as you want once the mortgage term ends. 

elsien

Do you have credit card debt that you are struggling to pay?

ACG

Generally speaking its normally best to not pay the ERCs, so maybe overpay what you can without incurring charges. Then pay you mortgage as normal  until the next anniversary (which might be next month?) overpay what you can again and then next year you can pay off a larger sum. 

But as above, it really depends on the interest rate on your mortgage, the ERC charges and what you can get on a savings account. 

Jessy07

MattMattMattUK said:

Jessy07 said:

We have recently had a critical illness payment. However, payment doesn't cover the full mortgage. 

Owe around £90,000 on the mortgage. 9 years 11 months. Will still owe £30,000 after paying credit cards. 

In a fixed deal till Feb 2027. 

I'm not sure what the best way forward is due to Early Repayment Charges. 

Are you able to give a little bit more info? Who is "we", you and a partner, will the partner not getting the payout continue working?

When you say the payment does not cover the mortgage is that due to using some of it to cover the credit card debt, were you under insured, something else?

Sorry ive not checked back on my post till now

Hi the critical illness was paid out for me. I had surgery on my lung. Im back at work. 

We remortgaged 2020 for home improvements  that's why the payment doesn't cover full amount.  The mortgage has 2 sub segments the lower is £23,000

We are in a fixed deal till Feb 2027 interest rate 1.54%

Jessy07

ACG said:

Generally speaking its normally best to not pay the ERCs, so maybe overpay what you can without incurring charges. Then pay you mortgage as normal  until the next anniversary (which might be next month?) overpay what you can again and then next year you can pay off a larger sum. 

But as above, it really depends on the interest rate on your mortgage, the ERC charges and what you can get on a savings account. 

Thankyou im thinking this is the best plan 

Jessy07

MWT said:

Would be good to know the interest rate on the fixed mortgage deal as well...

Interest rate at the moment is 1.54%

MWT

Jessy07 said:

MWT said:

Would be good to know the interest rate on the fixed mortgage deal as well...

Interest rate at the moment is 1.54%

No point in paying anything off the mortgage until that very low fixed rate ends in Feb '27, you can earn more in interest on the cash until then even after allowing for tax.