Soldato
- Joined
- 4 Aug 2007
- Posts
- 22,052
- Location
- Wilds of suffolk
Well no because at current rates you should be able to get close to 3% interest in an ISA. (rest can go it April 2011) so you should be able to get almost £1000 interest tax free over 4 years.
Even so, thats still a diff of £1500 approx so the mortgage interest rate looks high if it is genuinely 4 years left at £240 per month.
So assuming no fees to pay it looks like paying off the £9k seems pretty sensible.
In fact I have just checked the APR and there is something wrong somewhere, £240 a month over 48 months gives a massive APR of approx 20%.
I suspect the £240 is including something else, eg house insurance or life insurance or mortgage protection or something?
Assuming that would no longer be required it would be pretty clear that paying this off would be ideal.
Simple terms...
If she saves £240 per month, and assuming no interest at all it would only take 3 years 1.5 months to save £9000 back. Shes not going to get close to any interest rate able to make that worth not doing. But she absolutely needs to check her facts on the £240, the mortgage term remaining, and penalties for doing so etc as they fundamentally affect the calculations.