Mortgage - do I save or pay off lump sum

Apologies first - new to this site!

Need some practical advice, current situation

Mortgages are by best subject!

Mortgage - £185000.00 - 25 years
Monthly - £1100.00
Coming off a fixed 3 year term at the end of this month March 09 (4.0%)
Outstanding balance end of March - £175000.00

Will revert to variable rate - curently at 1.45% with current lender
My monthly payements will drop - but do I

a. Increase my payment to £1100.00 - so the term drops a few years

or

I have £45000.00 - savings

I have the abilty to do the following
pay a lump sum off the mortgage - £25000.00
Increase my payments to £2000.00 a month, which would drop my
mortgage term to a possible 7 years from the remaining 22 years


or


I could pay £45000.00 off the mortgage - leaving me with an balance £130000.00

Basically, I would like to know what is the best option to clear my mortgage (as quickly as possible)

any advise is appreciated

thx in advance

Hi Dieter, welcome to AAM.

Firstly before I say anything, which option appeals to you most?

Secondly, to give advice on which option to take you would need to consider some things.

-Have you any children ? (you may need access to money soon for college, school, medical costs!)
-Have you an emergency fund set aside in case of an unforeseen expense (losing job etc)
-How safe is your job (affects your ability to repay mortgage etc)

You are in a good position as you have several options, some which you have highlighted.

Heres another suggestion for you to consider (which is to be taken on its merits, I have very little to go by on information, Its just based on the limited info you have provided) -

You could use some of your savings to throw off a lump sum off your mortgage. Increase your revised Mortgage payments to €1100 per month and save the €900 you mentioned. At the moment Halifax offer 7% for monthly contributions. This coupled with lower interest rates on mortgages would make it financially worthwhile considering this option.

I suppose if your only goal is to pay off your mortgage then option 3 is the one you should take. Please note, this is not necessarily the most cost efficient way, simply the quickest way that can be calculated with the figures we have available.