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Original poster

Would you have confidence to pay down a chunk on the mortgage in this situation?

31 replies

moertage · 21/08/2024 19:05

I recently came into a reasonable chunk of money (45k). Alongside this I had a pay rise and should be in a position to save 1k-1,200 a month. I have no idea how the promotion will go so I don’t want to wholly rely on that obviously but so far so good.

I am thinking of paying down 40k of the mortgage to reduce it to 220k. I am 34 so not exactly a spring chicken and I do worry about how much I currently owe.

I have gone round in circles about this as the security of 45k in the bank feels amazing and I never thought I would EVER be in that position. What would you do? Is it risky to pay so much down? If I pay less than 40k it doesn’t adjust the repayments much but 40k means around 120 saving a month on the repayments

OP posts:
Boopbeepbeepboop · 21/08/2024 19:18

Do you have any other debts? Do you have any other savings? If no debts and if you have sufficient savings for say 3-6 months outgoings then I would pay the maximum possible this mortgage term and look to do the same again tin the next mortgage term . I've done the same and have closed to always pay the same amount and reduce the term. Seeing that interest knocked off and the term go down is brilliant feeling!

Madamecholetsbonnet · 21/08/2024 19:17

Do you owe property on your own?

Are you sure there’s no penalty for such a large overpayment? I would be inclined to make a smaller payment (assuming you own property alone) and shorten the term length rather than reducing monthly payments. Then you still have some money as back up for the unexpected.

Catza · 21/08/2024 19:15

Why not keep it for now and then pay extra 1k a month when the promotion comes through?
You can overpay your mortgage at any point, you don't need to make this decision immediately.

deepstarfish · 21/08/2024 19:14

We have enough money in the bank to pay off our mortgage, we haven't done it because of big penalties, we are limited to 10% overpayment per year. We do overpay every month and the benefit of this is if our financial situation were to change this is a credit against future payments.

TheFlis · 21/08/2024 19:08

Can you pay that much in one go without penalties? It’s normally 10% of the outstanding balance per year.

And if you do, particularly given the pay rise, you should use it to reduce the term (and therefore interest paid) rather than the monthly payments.

DancingPhantomsOnTheTerrace · 21/08/2024 19:08

What's your mortgage interest rate? Can you get more on the money if you save it?
Do you have any other debts?