Flexible Mortgage & Overpayments
Discussion
Ok guys,
I've got something in mind which I think adds up and would welcome any opinion. I have a flexible A&L Mortgage @ their SVR of 4.99%. There is no cap on overpayments and I can borrow back any overpayments made at any time. The mortgage stands at approx. £34k.
Now, I am soon to have £34k cash which I would normally invest in the highest internet instant access account available (currently circa 3%) and then bleed off approx. £3k/mth to my current A/C to cover bills/mortgage etc.
It dawned on me that i'd be much better off to lump the £34k into the mortgage account, thereby almost totally eliminating any interest acrued. I would then borrow back £2.5k each month, which equates to the £3k less £500 which is my normal mortgage monthly payment, to my current A/C.
As a higher rate tax payer, i've calculated that doing this would save me quite a bit of cash over the year. As I receive a dividend at the start of each tax year, I would place another lump sum in the mortgage a/c in 2010/11 and do same unless saving's rates have improved ......... yeah right!
Any thoughts?
I've got something in mind which I think adds up and would welcome any opinion. I have a flexible A&L Mortgage @ their SVR of 4.99%. There is no cap on overpayments and I can borrow back any overpayments made at any time. The mortgage stands at approx. £34k.
Now, I am soon to have £34k cash which I would normally invest in the highest internet instant access account available (currently circa 3%) and then bleed off approx. £3k/mth to my current A/C to cover bills/mortgage etc.
It dawned on me that i'd be much better off to lump the £34k into the mortgage account, thereby almost totally eliminating any interest acrued. I would then borrow back £2.5k each month, which equates to the £3k less £500 which is my normal mortgage monthly payment, to my current A/C.
As a higher rate tax payer, i've calculated that doing this would save me quite a bit of cash over the year. As I receive a dividend at the start of each tax year, I would place another lump sum in the mortgage a/c in 2010/11 and do same unless saving's rates have improved ......... yeah right!
Any thoughts?
I would personally pay off my mortgage, even if the rates were similar.
As your mortgage rate is more,I can't see any good in earning less from the interest from current account to pay your mortgage monthly.
I'm also parnoid about somebody fraudulently withdrawing money from my account, so I choose to overpay my mortgage anyway.
Btw, I wish I was in your position. Nice one
As your mortgage rate is more,I can't see any good in earning less from the interest from current account to pay your mortgage monthly.
I'm also parnoid about somebody fraudulently withdrawing money from my account, so I choose to overpay my mortgage anyway.
Btw, I wish I was in your position. Nice one
Watch out for lenders that change an arrangement fee for any borrow-back.
You would be better off topay off your mortgage and find money for bills from elsewhere. If you are facing a whopping fee to discharge the mortgage then pay off all but the last £200 or so and change your payments to £1/month.
You would be better off topay off your mortgage and find money for bills from elsewhere. If you are facing a whopping fee to discharge the mortgage then pay off all but the last £200 or so and change your payments to £1/month.
Gassing Station | Business | Top of Page | What's New | My Stuff