Pay mortgage off with loan??

holly876dog

Hi All,

Our mortgage deal is up for renewal end July, we should owe about 33k. We have enough in both our ISA's to pay this off, however, from a MSE point of view I'm not sure if this is right thing to do. We have about 8k in normal savings account if we pay off mortgage would leave 25K. At this point I'm not sure if to get loan or remortgage or just pay the full lot off. I know a loan will be higher APR but flipside is not paying arr/exit fee/val/legals etc if we get loan. Our credit rating should be ok. If anyone has advice or been in similar circs then I'd love to hear from you.
Thx.
xx

Tiddler_2

How long is left on your mortgage (not the deal - the full term remaining) as unsecured loans are usually over a max of 5 years, though some do have terms up to 10 years (only Barclays though I think)

KiKi

If you have £8K in separate savings, I'd pay it off.

Chances are that your mortgage interest rate is going to be higher than the tax-free interest you're earning in your ISAs.

Paying it off is obviously the cheapest long-term option, and that's what I'd be tempted to go for, and what I'm planning on with my ISA! As long as you have some savings for emergencies and to fall back on.

I wouldn't take out a loan, personally, to cover it, if I've got the money to pay it off.

KiKi

holly876dog

Hi Tiddler,

We have about 4 years left on mortgage as we are overpaying (about 6 years with no overpayment). I dont mind staying with lender but the SVR is so high so need to act fast. If the rate is lower dont mind opting for secured loan. Unlikely to have problems getting fairly good deal as low LTV (20%) but would loan be best route or look for another mortgage deal?
Thx for help

holly876dog

Both our ISA's with Ruffler, think rate is 6.10% or very close to. Not looked at mortgage deals yet but may get something bit lower than that. The issue I see paying it off would be the money now saved by no mortgage paymant would be eaten by taxman as we have used both our ISA allowance this year and then can only put 3600 each (cash, no shares please!) thereafter. I wouldn't be hesitating paying it off if the ISA allowance was that much higher.

Jonbvn

holly876dog wrote: »

Both our ISA's with Ruffler, think rate is 6.10% or very close

That is the gross rate with interest paid quarterly. To ensure you compare like with like, you should use the AER which is currently 6.25%. You can compare the AER directly against the APR for the mortgage.

HTH.