A question about : Pay lump sum off mortgage or not?
Am wondering whether to pay a lump sum of Ј15k off my Ј45k mortgage.
The Ј15k is with Cahoot (5.5%), the repayment mortgage fixed rate of 4.25% for 2 years and in it's first year.
Now I realise that I'll be paying more mortgage interest than I'll receive in savings interest so it probably makes sense to pay off a chunk. Problem is, I love the thought of having that lovely cushion of money handy for 'a rainy day'. Ideally I'd like to invest in a property abroad, Spain etc, but haven't got quite enough to buy yet. (I'm a good penny-saver, lol - have more invested in ISA which I don't really want to touch - unless to purchase my holiday home abroad).
Maybe I can't see the wood for the trees in this situation so would love to hear if any of you wise folk have any suggestions???
Clean replies only, lolol.
PS Thanks in advance 
Best answers:
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Why not get an 'IF' or 'Oneaccount' or 'Open plan' account. I.e where u put savings and mortgage into 1 pot. U won't earn interest on savings but they'll reduce the interest ur paying on ur mortgage.
That way ur 15k stays available but while not needed it's interest rates cancel completely the debts interest rates.
Pak - For many people this kind of mortgage is not a good idea. !The mortgage rate tends to be rather higher and the ratio of mortgage to savings is also high and it is this ratio which determines the viablity of the scheme.
You may be an exception to this rule as you have a substantial amount of savings.
If you could "be bothered" there is 7% on offer (5.6% after 20% Tax) from Halifax and from Abbey starting !tommorow on new regular saver accounts. !Probably one year accounts. !You could use some of your money for those.
There is no clear compelling choice. !I think it is your call.
[Move] !You would get far more answers to your financial query if you put it in one of the financial sections much higher up the page than the silver savers section. ! Robert Shilling. [/move]
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