I can pay off my mortgage early. Should I?
Discussion
My initial reaction, of course, was a resounding YES!
But the situation is not quite that simple.
I have a domestic mortgage committment of £155,000.
I have recently inherited exactly the same sum.
The mortgage is fixed at 4.66% to November 2007, with a 290 day gross interest pentaly on early redemption.
If I stick the cash in a high interest account until November 2007, my faltering arithmetic suggests that the difference between net interest earned and mortgage interest paid will be less than the redemption penalty.
If this is correct (and it probably isn't, cos I'm crap at sums) then where is the best place to put the cash until Nov 2007?
I must confess to being sorely tempted to buy that old Ferrari 328 that I have always promised myself, while I am still young enough not to look daft in one. The depreciation and running costs would not be too horrible over a couple of years.
Suggestions, abuse, views, sarcasm, insults, humour, wit and wisdom are welcome.
Cheers :drink:
Pat
But the situation is not quite that simple.
I have a domestic mortgage committment of £155,000.
I have recently inherited exactly the same sum.
The mortgage is fixed at 4.66% to November 2007, with a 290 day gross interest pentaly on early redemption.
If I stick the cash in a high interest account until November 2007, my faltering arithmetic suggests that the difference between net interest earned and mortgage interest paid will be less than the redemption penalty.
If this is correct (and it probably isn't, cos I'm crap at sums) then where is the best place to put the cash until Nov 2007?
I must confess to being sorely tempted to buy that old Ferrari 328 that I have always promised myself, while I am still young enough not to look daft in one. The depreciation and running costs would not be too horrible over a couple of years.
Suggestions, abuse, views, sarcasm, insults, humour, wit and wisdom are welcome.
Cheers :drink:
Pat
PatHeald said:
I must confess to being sorely tempted to buy that old Ferrari 328
You know your "daft things you do without thinking" thread chief?
Your thinking again aren't you.
Stop it.
In case your thinking again:
Stop it.
Stop thinking and do it.
>> Edited by Scoobz on Monday 11th July 08:03
PatHeald said:
...while I am still young enough not to look daft in one.
If I was in your shoes, my initial thought would be to pay off half the mortgage (if you have a flexible account which allows you to do this) thereby substantially reducing the monthly outgoings for the remainder of the term, put some of the cash into a savings account for a rainy day and then spend the rest on a few luxuries. (In my case, the luxuries would include a couple of horses, another sports car and a trip to Canada, Australia and New Zealand to visit relatives, etc.)
Witchfinder said:
Can you pay all but £1 of your mortgage off? That way, you don't need to cough up the penalty, but you're effectively "debt free". You should also be able reclaim your overpayment at any time should you suddenly need the cash.
Thats a good way round a redemption penalty.
You lucky lucky b
d etc
It depends IMO on how the redemption penalty would work, and what you want to do with your life, whether you like your job etc
There are tax implications with BTL if tyou don't make the mortgage cost more than the money you're getting in rent, so you're back to square one with that. And IMHO unless you can find something for a bargain price, now might not be the best time
Have you thought about investing in a classic car, Ferrari for instnace
d etc It depends IMO on how the redemption penalty would work, and what you want to do with your life, whether you like your job etc
There are tax implications with BTL if tyou don't make the mortgage cost more than the money you're getting in rent, so you're back to square one with that. And IMHO unless you can find something for a bargain price, now might not be the best time
Have you thought about investing in a classic car, Ferrari for instnace
Witchfinder said:
Can you pay all but £1 of your mortgage off?
Doubt that will work.
Check with your lender but:-
Pay off 10% of outstanding capital now and then again in 12mths time. This is usually the maximunm you are allowed to pay off in any 12mth period without inducing the Early Repayment Penalty.
You can then put the rest away in a high interest account, or even a 12mth bond, if you think you might be tempted to spend it.
What would I do in your position? The above, save that i would possibly look at spending iro £25k on fun car or whatever.
Don't know what you are paying per month but it's got to be about £8-900 at the very least. Imagine that extra every month?
cosmoschick said:
If I was in your shoes, my initial thought would be to pay off half the mortgage (if you have a flexible account which allows you to do this) thereby substantially reducing the monthly outgoings for the remainder of the term, put some of the cash into a savings account for a rainy day and then spend the rest on a few luxuries. (In my case, the luxuries would include a couple of horses, another sports car and a trip to Canada, Australia and New Zealand to visit relatives, etc.)
Agreed, pay chunk off mortgage then if not done already done new bathroom, kitchen, double glazing, decorating, new furniture etc. Whats the point of being debt free and living in a hovel.
Also I would keep my existing car and get a toy for the weekends, Caterham or Arial Atom
Wish I was in your position
john75 said:
Can you pay all but £1 of your mortgage off? That way, you don't need to cough up the penalty, but you're effectively "debt free". You should also be able reclaim your overpayment at any time should you suddenly need the cash.
Thats a good way round a redemption penalty.
only works with a very few mortgage companies eg northern rock.
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