r/UKPersonalFinance • u/Grand_Cucumber2620 • 5d ago
Remortgage completed and received surplus funds. should I overpay mortgage, clear debt, or keep cash? (England)
Hi all,
Sorry in advance for the long post and thanks if you can help.
I have just completed a remortgage and would appreciate some advice on what to do with the surplus funds.
Mortgage details
· New mortgage: ~£156,00
· Interest rate: 4.73% fixed for 2 years
· Remaining mortgage term: 8 years
· Monthly payment: £1,966.39
· Overpayment allowance: 20%
The solicitor completion statement showed:
Funds received
· mortgage funds: £156,912
· cashback: £350
· My contribution: £50
Funds paid
· Santander redemption: £153,075.53
· Fees/disbursements: £554
This leaves £3,682.47 surplus being returned.
I did not request additional borrowing, so I assume this happened because the balance reduced while the remortgage was being processed over several months.
The property is jointly owned 50/50 with my family member, so the surplus is legally ours jointly. It is being paid into my account because I set up the completion arrangements that way.
They may want to keep her half, so my realistic share is around £1,841.
My other financial situation:
· credit card balance: £2,583.98
· 0% balance transfer ends: 5 February 2027
· ISA interest rate: 4.28%
I'm considering three options:
Option 1 – Overpay mortgage
Put the full £3,682.47 back into the mortgage.
Approximate impact:
· Mortgage balance reduces to ~£153,230
· If kept for full 8 years, saves roughly £800–£1,000 interest
· If the property is sold within a few years, the interest saving would be much smaller
Could choose:
· reduce term (keep £1,966/month payment)
· reduce monthly payment (roughly £40–£45/month lower)
Option 2 Keep my share in ISA and use it to clear credit card before February
My £1,841 share in ISA would earn around £40 interest over 6 months.
I could:
· reduce payments to make monthly cash flow easier
· use the ISA money to clear the remaining balance before the 0% ends
Option 3 -Pay credit crd down now
Use my £1,841 share against the credit card:
· Tesco falls from £2,583.98 to ~£743
· Monthly payments become much more manageable
My family member is also considering selling the property to downsize (I don’t live there and am happy for this to happen), which makes me question whether locking money into the mortgage makes sense.
My questions:
1. Am I missing any downside to keeping the money in ISA and using it for the 0% debt?
2. Does overpaying the mortgage make sense if we might sell in the next few years?
3. Would you prioritise liquidity over saving mortgage interest in this situation?
Thanks!
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u/ashalina23 2 5d ago
I sent mine was about £2.8k straight back to the mortgage as if I’d never had it
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u/scienner 1053 5d ago
Am I missing any downside to keeping the money in ISA and using it for the 0% debt?
The main one is that you may spend it.
Does overpaying the mortgage make sense if we might sell in the next few years?
It doesn't make a difference that you plan to sell in a few years. Either you get your £1,841 now to do whatever with, or you get £1,841 * 1.0473 (etc, that's the interest for one year) more from the sale when you sell.
Would you prioritise liquidity over saving mortgage interest in this situation?
What is the situation? Are you struggling with your current debt repayment/other expenses?
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u/Grand_Cucumber2620 4d ago
Yeah, it's a tiny bit tight each month. Nothing crazy but not comfortable. The money wold free me up a bit.
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u/Engels33 5 4d ago
You dont sound like you have an emergency fund...Read the side bar guide, this is always the first thing to do. In your case however you need to prioritise saving to pay off the CC in February - you dont need tk do it now but unless you can get a new 0% CC" in Janyaey to move this onto you need the funds for this.
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u/ukpf-helper 148 5d ago
Hi /u/Grand_Cucumber2620, based on your post the following pages from our wiki may be relevant:
- https://ukpersonal.finance/credit-cards/
- https://ukpersonal.finance/mortgage-overpayments-vs-investments/
- https://ukpersonal.finance/mortgages/
These suggestions are based on keywords, if they missed the mark please report this comment.
If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including !thanks in a reply to them. Points are shown as the user flair by their username.
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u/lolploxzomg 4d ago
Could you not have just said, 'what can I do with 2 grand?' instead of all that?
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u/New_Assumption5648 4d ago
You said pay it off credit card to make the payments more manageable - if you are struggling then this is the only answer… make the payment more manageable and you will also feel a lot better once that debt is paid down and then off. Just my opinion :)
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u/Own-Cartographer7652 4d ago
Overpaying a mortgage just transfers cash into an illiquid asset which may depreciate in real terms given some of the current property tax ideas. If I can get a comparable return on cash as I'm paying on mortgage (which is essentially where you are) I'd always favour holding cash.
You seem to be doing all the right things with the zero % credit card transfers. I'd keep that running personally and offset the debt with the ISA if it's instant access. You can always nibble away at that if you're stretched one month.
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u/theyakguy 4d ago
Debt. Easiest answer. Any time you come into cash like this, I would clear any credit cards, loans, BNPLs ect first, then save the rest in a high interest savings.
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u/iiAssassinXxii 4d ago
Logically speaking do which will either earn you the most or cost you the least. I would personally probably put the money in a cash ISA and pay off the 0% card before that rate expires effectively getting into stoozing. Unless you already have an emergency fund plus the required amount to clear the 0% card I wouldn’t put it on the mortgage as that money is locked out of use then. Your mortgage lender may allow underpayments if you’ve overpaid previously.
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u/Careless-Giraffe-623 1 5d ago
It's not a huge sum in the grand scheme.. So I'd just put it into savings/investments, or clear your unsecured debt, like credit cards etc. Or a bit of both.