Is this a no brainer? Mortgage & savings

[ChimChimeny]

We have a mortgage at 4.39%, enough in savings to pay it off which is 7% interest.
We'd have to pay an early repayment charge (haven't been able to find that out yet) but is it as simple as higher interest rate on the savings than the mortgage so keep it there?
Thanks

what is the value of the property?

Taking into account your updates @ChimChimeny , I would say that from April when the ERC drops, the difference is so marginal that emotion and psychology become more important - especially if you are disciplined enough to divert former mortgage payments to rebuild savings. The feeling of being mortgage free would win for me here.

(and no, you don't need an IFA, it's not what they deal with - certainly not for relatively small amounts).

I agree with this! When we were in the position of having more in savings than mortgage, we chose to pay off the mortgage. Financially, we lost a potential few hundred £s in savings interest by doing so, but the feeling of not having a mortgage to pay is priceless. We made sure to set up a standing order equivalent to the mortgage payments into a new ISA at a higher interest rate and have recouped most of the cost of paying it off but in a shorter time.

@Soontobe60
@SweetLathyrus

Discussed with DH last night & we’re both in agreement with you 😁
we are very disciplined with money & will definitely save the mortgage money so the savings will be replenished pretty quickly.

We paid it off yesterday/today, we waited until the early repayment charge dropped, and overpayed 10% of the balance first so it was even lower. We're left with about £10k in savings which we will replenish monthly with the amount we were paying for the mortgage plus what we used to save before.
It is like a weight has been lifted!!

Congratulations @ChimChimeny 🙂👏

Don’t forget that if it is a large sum you are meant to pay tax on your interest above certain thresholds, at your normal tax rate (or 50/50 between you and your husband).

Its worth looking around at ISA accounts as Coventry are paying just shy of 5% and you can withdraw 4x a year and add money to the account

This gives you an decent interest rate but it is also tax free, you multiply the rate by 1.5 to get your rate before tax so you are in reality getting over 6%

By the time you're putting your mortgage repayments in each month it'll soon add up and it saves you paying tax

as an aside - yes you both would be wise to look at paying extra into a works pension if you can, you can end up paying in an extra £100 per month but only reducing your net pay by £70 for example, in some works pensions due to income tax not being accounted for until he pension contributions have been taken out first.

That's a very good idea, we did briefly talk about it but need to revisit.

I already pay about 15% because I'm part time (prob never will be full time again) and DH pays 10% because he started paying a decent amount in relatively late.
Well do a combination of savings and pension I think.

The interest rate on the current savings is dropping from 5% to 4% in May so well look at the cove try