Clear mortgage or save?

N

Nadd

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I have decent savings and after a small inheritance I have enough to clear my (tracker type) mortgage of 60K EUR in full.

At the moment my savings are earning very little and it seems to make sense to pay off the only loan I have even I would be giving up access to a tracker mortgage. From what I read if I decide to trade up in the next year or so I may not be able to increase my tracker mortgage & would properly only get offered a variable or fixed rate product.

BTW just to clarify I have no other loans and I will be losing my mortgage interest relief. My job is relatively secure. Clearing my mortgage would clear out my savings but if I become mortgage free I should be able to build up a nest egg again relatively quickly.

Any advice would be appreciated.
 
You probably need to decide how likely you are to trade up. If there is the slightest likihood, hold onto the cash & continue to save. There is no guarentee they will allow you to transfer your tracker mortgage over as it will be a new loan - but you'll have a stronger bargaining position if the mortgage is still in place.

Having the cash at that stage (if you buy) means you can pay a large deposit & keep your new mortgage as low as possible (as it will be a more expensive loan if you end up on variable).

Best thing is not to make any rash decisions - once you give the bank the cash, you can't get it back, so be sure you don't want it for anythng else in the foreseeable future. So get the best return you can for the next month or so while you make your decision.
 
keep it on deposit - look at the savings best buys - you can get 4.5% APR (ex DIRT). You can get a higher rate on deposit than what you mortgage rate is, i.e. your bank is subsidising your mortgage!!!! Trackers are like gold these days - so don't change under any circumstance. Even better is that you are still getting interest relief.

So put it in a high yielding deposit account!!!
 
Thanks for the replies. I will look into the high interest deposits, I didn't realise I could get such a good rate.
 
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