Q I'm trying to find out how to calculate the impact of repaying £15,000 on my mortgage which I'm considering taking from an endowment policy which has been performing abysmally.

I am in the fortunate position of having a fixed-rate mortgage which is at 0.75% above base rate. It has £113,000 on repayment and £50,000 on interest only and has 17 years left to run. The current rate is for the rest of the mortgage term. How much would I save over the term of the mortgage if I put £15,000 in as a lump sum now? BO

A Clearing £15,000 of the interest-only part of your mortgage would mean your monthly mortgage payment would go down by £15.62 (assuming an interest rate of 1.25%, ie base plus 0.75%). Over a year, you would save £187.50 in interest and over 17 years you would save £3,187.50 assuming the interest rate remains the same as it is now.

The calculation is relatively straightforward for paying off part of an interest-only mortgage because you take the amount of mortgage paid off and multiply it by the interest rate to arrive at the yearly saving in interest.

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