Advice needed

Luckyjammygit

Hello all

Having just been made redundant I am in the position of being able to pay off our mortgage of £18,300 with 6 yrs to go.

However after cashing in pension lump sum we will have a total of £40000 and will need to keep £5000 of this to pay a loan which will be covered by insurance for a year so may buy £5000 premium bonds.

I am disabled and cannot see a job offer coming for a while although will be trying to get one.

My question:

Is it better to try and keep all the money together and try to match or beat mortgage with savings interest or pay off mortgage asap?

Thanks for any replies.

Trying_to_be_good

What is your mortgage rate? We may be able to help with specific products if we know what you're paying.

Are there any Early Repayment Charges on the mortgage?

Luckyjammygit

Thank you for reply

Paying 7.25% as overpayments and no charge for paying off so we can be flexible with outstanding mortgage.

Trying_to_be_good

Wow - with a mortgage rate that high (presumably not worth remortgaging with such a (relatively!) small mortgage outstanding) I'd be paying off the mortgage. Even the top cash ISAs are only at 6.5%.

It would be worth putting some of the excess in cash ISAs, though, as this will give you a guaranteed return whereas premium bonds don't give a high return (Martin's written an article somewhere - will have a look for it).

Found it: Premium Bonds: Are they worth it?...

dimbo61

pay off your mortgage as soon as you can put into ISA,s with barclays 6.5%
£3000 this month and £3600 in april ( each )!!!
benefits agency will ask how much you have in savings when you try to claims benefits so clearing your mortgage will reduce the amount of money
in savings and also mean your home is paid for and cannot be taken off you
as long as you dont take out any secured loans on it. GOOD LUCK
clearing your mortgage which you are paying 7.25% on is the best option

Luckyjammygit

Thanks for your replies

Only paying 7.25% because we left it on this rate to overpay when it came down.

Was going to get premium bonds as my loan is covered by insurance for a year and then would cash them in to pay loan.

Thanks for the isa info and I think this is what we will go for and pay off mortgage.

All the Best!
And good Luck!

ailuro2

If you think you may end up claiming benefits, then consider savings thresholds too- iirc there's a maximum amount of savings anyone can have before it starts to affect their benefits, and the threshold is fairly low.
I might be barking up the wrong tree here- forgive me if I am, not knowing all of the situation.:o


I'm a MFW as you can see from my sig, so you know what my answer would be- as long as the interest in your mortgage is higher than ISAs etc.

Trying_to_be_good

I've read somewhere that ISA interest isn't counted for means-tested benefits calculations, but I don't know the rules. Anyone know if ISA capital and interest is sheltered/excluded from these calculations?