Mortgage - moving home

[Chellors123]

Hi

we are looking to move in the next 12 months. We want to move to a better location, more rural but in the same county (south east). Our next house is likely to be around 750k, our house is likely to sell around 550k.

we have 80k left on our mortgage, currently pay £1200 (across 2 ported mortgages).

we have 120k in savings.

can anyone help me understand the most logical way financially in which to make this move happen. I can’t work out if it’s best to use some savings to pay off outstanding mortgage before moving or port them again along with borrowing the additional. I just can’t my head around it and whether there is an obvious best way to do this that I am missing!

info it helps, me early 50’s, DP late 40’s, combined income 125k. 2 kids at home (13 & 17)

Any words of wisdom welcomed 😊

What's the interest rate of the mortgages compared to the interest you make on your savings after tax? If you pay less in mortgage interest than you make in savings interest, keep the savings. Xx

Thanks, at the moment one mortgage is 40k fixed at 3.85 and the other is 40k lifetime tracker +0.79 (so 5.04).

Savings are mostly on premium bonds

Unless you've done really well on your premium bonds the average rate of return in prizes is 3.8% (although apparently going to get worse) I think you would do better having some of those savings in ISAs if you haven't maxed your ISA allowance out already. I'd keep the 3.85% mortgage though as you won't get much better than that for the rest you need to upsize.

Personally I'd pay off the 5.04% mortgage unless you can consolidate it into the mortgage you'd get to upsize. With your equity you're probably looking at just South of 4% deals.

Whether you use the rest of your premium bonds to pay towards the upsize or keep as they are, it seems a much of a muchness. If they are long term savings I would be tempted to diversify them a little bit more by investing in world tracker funds or at the very least cash ISAs, but obviously the former comes with a bit of risk and you have to not panic at market dips. (Especially with Trump titting about with tariffs)

As I said before whether you save or pay off mortgage just boils down to interest in vs interest out. If its equal, I err towards keeping it in savings so I have access, I'm not in danger of spending it and it doesn't bother me if I have a large mortgage if I have large savings to balance it all out. Understandably I 100% get the mental relief of having a lower mortgage and that is worth considering even if its slightly less lucrative.