Pay off the mortgage or save?

Jules

I only have a small mortgage of £17,950 with a current rate of 6.35% paying £94.75 a month interest only, with exactly 7 years left to run.

I am being made redundant and my package means I could pay off the mortgage, but should I or should I save the money?

I'm not sure how to work it out and am hoping some of you here may be able to help.

I can also put any savings into my OH name as he is a non tax payer.

I would be grateful for any ideas and help. Thanks

dimbo61

if you are on interest only how are you going to pay the mortgage in 7 years?
have you got another job lined up when you get made redundant ?
you will struggle to get 6.35% from savings accounts , ISA,s etc
you might be better off clearing the mortgage as the benefits agencies would
expect you to live off the redundancy money for X amount of time !!!
please go and see citizens advice ASAP.

Jules

dimbo61 wrote: »

if you are on interest only how are you going to pay the mortgage in 7 years?

Have been saving each month for this, but now I have a lump sum from my redundancy.

have you got another job lined up when you get made redundant ?

Yes its only part time but I have a retraining grant of £1000 to use so will be going back to college as well. (Yikes left college 18+ years ago!!!)

you will struggle to get 6.35% from savings accounts , ISA,s etc

Hubby gets 6.5% on his regular saver account as he is a non tax payer and ICICI offer 6.41%. My plan would be to put it all into the ICICI account and then drip feed accross into the regular saver, and from what I can gather he can have more than one of these.
We have never had this sort of money and will never again so I just want to hang onto it as long as possible.

you might be better off clearing the mortgage as the benefits agencies would
expect you to live off the redundancy money for X amount of time !!!

Hopefully I won't need to sign on, its not part of the immediate plan anyway.

please go and see citizens advice ASAP.

I am starting my volunteer training with them next month so don't really want to become a client if I can help it although they do know of my impending redundancy so might not be a bad idea! Thanks

Kaz2904

If you don't need the income at present it may be prudent to put the money in savings. Also if you have no income you ought to benefit from not paying tax on your savings either.
You need to work out whether or not you can afford day to day living with still needing to make your mortgage payments.

In reality it is not much different to stoozing with credit cards. As long as you are able to earn more interest than you are paying then you ought to be on a winner. How about running your figures through the snowball calculator on www.whatsthecost.co.uk so that you can see in hard figures what would be best.

Jules

Kaz2904 wrote: »

If you don't need the income at present it may be prudent to put the money in savings. Also if you have no income you ought to benefit from not paying tax on your savings either.
You need to work out whether or not you can afford day to day living with still needing to make your mortgage payments.

In reality it is not much different to stoozing with credit cards. As long as you are able to earn more interest than you are paying then you ought to be on a winner. How about running your figures through the snowball calculator on www.whatsthecost.co.uk so that you can see in hard figures what would be best.

Oh why didn't I think of www.whatsthecost.co.uk , brilliant. Thank you.

I have been able to put all my figures in and although I won't be making a lot I could make around £2000 (after taking mortgage payments into account) depending on the interest rates. Just what I needed to see.

Thanks again
Jules