Once we have accumulated the money, we then have a dilemma. We currently have the money in premium bonds, which give us various amounts of return each month. Last month we got just £25 but this month we got £150. Each month while the mortgage is outstanding we are charged £81.50 in interest and we also pay £11.50 in life insurance and if we pay off the mortgage those charges will go. This means that we need to be getting a monthly return of more than £93 a month, on average, on the money in premium bonds to make it worth not paying the mortgage off. If interest rates go down, which it seems that they may, then what we pay in interest will fall, but the premium bond prize fund may also fall due to the economy not doing so well. It is a difficult decision to make.
However, we have decided that we will certainly wait until we have a savings buffer before paying the mortgage off. We feel that we should make sure that we have at least enough money for three months worth of expenses in case of redundancy or needing emergency purchases such as white goods breaking down or car or house repairs being needed. After that we will have to do some serious maths, risk assessments and calculations to decide when we pay it off.