mortgage amortisation - payment dilemma

[sawman]

we currently have a part and part mortgage (in fairly equal portions) with 15 years to run. Nominally my pension lump sum will settle the interest only portion, but an option to take pension benefits now and improve my work/life balance by continuing to work on a reduced hours for the next 7-10 years, has popped up - this means that my lump sum would arrive earlier, but not be as big. I am currently in a fixed deal for next 3 years so can only chip 10% a year of the balance for now.


I am struggling to get my head around which bit of the capital to repay with the lump sum (as it wont cover the whole interest only portion) I guess that paying off a chunk of the interest only bit in preference to the repayment section may work out cheaper in the longterm as both sections will be reducing over the next 3 years, although monthly payments today wont change much (which isnt a problem as my monthly income will be up by about 10%!). With any luck I'll be able to chuck a bit more capital at the loan come the end of the fix period.

anything else I should consider? not really sure how repayment mortgages amortize, I have found a couple of calculators on line, which seem to support my thoughts around clearing as much of the interest only bit.

There is a fair possibility that we will downsize and possibly relocate at the 7-10 year point

[Sarnie]

Interest Only section every time….

[sawman]

Cheers, Liam - good enough for me!

[JulianPH]

I was going to say.. If Liam says anything about mortgages then you should listen.

You beat me to it!

As always he is correct. You will always save more money this way (unless you have a crystal ball).