Mortgage overpayments?

[Smiley198700]

Evening all

Need a bit of advice on mortgage overpayments. We have come into some money (£4500) and are trying to work out the best thing to do with it. We currently owe £131000 and are 2 years into a 4 year fixed rate mortgage. Borrowed £136000.

We are trying to figure out if we are better overpaying by £500 (max nationwide let us) for 9 months, putting it in an ISA until April 2017 when we need to renew or suffer a bit of early repayment fees and paying the full £4500 off now?

First world problems I know but we just put the figures into an overpayment calculator (which seems to assume you want to overpay forever) and it's pretty amazing when you see how much less interest you pay/ quicker it's paid off even with £100 a month overpayment

Any advice would be welcome

[Smiley198700]

mike9009 said:

We had a similar dilemma and also have a Nationwide Mortgage.

For some reason we have two different mortgage accounts with the Nationwide which allows us to pay off £1000 per month. I would pay off £500 for nine months if I was in your shoes. It is amazing how much it takes off the full term of the mortgage and how much money it saves.

I think moneysavingexpert.com has a simple calculator to show you how much is saved over the lifetime of the mortgage.

Mike

That's what I was thinking, the money will be in an ISA gaining interest anyway with us manually paying £500 to the mortgage every month. We will definitely be overpaying by £100 after though, it knocked something like 6 years off the remaining 28. Would love to be mortgage free by 40 but that's probably wishful thinking at the moment...

[Smiley198700]

Claudia Skies said:

How much are the early mortgage repayment fees?

Not sure - it seems impossible to calculate, although it was something in the region of £6000 if we were to pay it all off now

Claudia Skies said:

What rate are you paying on the mortgage?

3.6% until April 2017

Claudia Skies said:

What rate can you get in the ISA?

1.4%

Sharted said:

Just be aware that when you withdraw from the ISA in 2017 you lose the tax free allowance that you have built up for ever.

Be better to use an ISA for your long term savings plans and non-ISA for short term.

What do you mean? I thought the allowance was reset every year?

Thanks

[Smiley198700]

Brite spark said:

It is, but once money is removed from a previous years isa it can't be put back.

Ah yes we know that - that wouldn't be an issue anyway

lots of good advice here chaps - will have to discuss it all with the missus later.

Edited by Smiley198700 on Tuesday 27th January 13:16

[Smiley198700]

DeuxCentCinq said:

Have you not thought about buying some sort of car?

Of course I have - could get a nice soft top for that money but head rules over heart here - it's quite staggering when you see the interest you can save by paying off the mortgage early even with something modest like £100/month overpayments