What to do?

CDP

Hi all!

I wondered if anyone out there can give me some thoughts on this situation please?

Currently on fixed rate mortgage paying 1.5% with NBC this rate finishes in Feb 09 when the balance outstanding will be £60K. It then transfers to SVR and stuck there for 3 years. However we are repaying £2K a month atm so the term left in Feb 09 would be due to paid off in Aug 11.

Now we have a nest egg of £95K in Savings that we are thinking of either finishing the mortgage in Dec 08 when the balance will be £64K, however in doing this we incur a penalty of 6% which is £3867. If we leave it until Feb 09 then the penalty increases to 7% hence the idea to pay it off in Dec 08. I have calculated even with the penalty we will pay less than we would have done in interest.

So far so good!

Heres the dilemma... we have been contemplating buying a holiday home in France. Do we not finish mortgage early and use the lump sum to fund holiday house or do we finish mortgage and borrow again at lower rate to fund the France house!

What are your thoughts???

Thanks

CDP

dimbo61

what in feb 2009 will the SVR be is the question and nobody knows the answer.
who said you will get a lower rate for your holiday home in france ???
can you afford two mortgages at the same time or do you hope to get the perfect little french palace for a few euro,s
who is NBC and are you only paying 1.5% on your mortgage ???
wait till nearer the time, build up your savings and I would see what the costs work out then. if you pay off the mortgage on your main home
it will make things easier to work out if you can afford the french home
GOOD LUCK

CDP

Hi

We can afford the two mortgages esp as they wont be that large if I use the capital for the French house.

Newcastle Building Soc is who we've got our mortgage with and yes it REALLY is only 1.8 ( soz got that a little wrong but still ridiculously cheap) even when looking at the whole term it still worked out cheaper than all we looked at. I am paying off the max overpayment every month to attempt to get the capital down and have the lump sum in high interest savings accounts.

We have seen house we like in France for around £100K which wouldnt mean too much a mortgage if we use the lump sum but as you say then still have mortgage here at same time... Hmmm

We will need to make a decision about the NBS mortgage at the end of the year but as you say things could be a lot different then.

Thanks for your thoughts....any more out there?

CDP