Save or pay more to mortgage ?
Discussion
A lot will depend on the amounts involved and whether the mortgage is on a fixed rate, and your own personal circumstances.
Eg - if you have no savings to fall back on and a low fixed rate mortgage, maybe be worth building up a safety net in savings
Likewise if you large high rate debts, then usually best to pay those down first
If, however, you have sufficient savings then it may be worth paying down the mortgage.
Without more information difficult to say what is best.
Eg - if you have no savings to fall back on and a low fixed rate mortgage, maybe be worth building up a safety net in savings
Likewise if you large high rate debts, then usually best to pay those down first
If, however, you have sufficient savings then it may be worth paying down the mortgage.
Without more information difficult to say what is best.
There was a big thread about this a while ago, you got every position under the sun. I think it comes down to your level of comfort with debt and the risk you are prepared to take.
Some users max out the debt, fix in a low rate deal and have little intention of paying off their mortgage. Just servicing the interest and living the YOLO dream with fancy motors on a lease, expensive holidays on the credit card etc.
At the other extreme are the 5 years to financial freedom types who live off beans and put every penny onto their mortgage with a view to getting the debt gone so they have more flexibility when they are older.
I fall more towards the latter. I've been aggressive in paying off my enormous and scary mortgage. You can lose your job at any time, you could get sick, your family could get sick, the economy could go south and living hand to mouth with a ton of debt which can be called in leaving you losing your home/car being powerless to stop it, is not for me. For me debt is a prison that makes me work for The Man forever and I want to be free of it ASAP.
Saving is a bit pointless now. I think you should have a broad base, some cash, some stocks, a solid pension base, some safe but boring funds, some paying down the mortgage and build those funds as much and as fast as you can.
Some users max out the debt, fix in a low rate deal and have little intention of paying off their mortgage. Just servicing the interest and living the YOLO dream with fancy motors on a lease, expensive holidays on the credit card etc.
At the other extreme are the 5 years to financial freedom types who live off beans and put every penny onto their mortgage with a view to getting the debt gone so they have more flexibility when they are older.
I fall more towards the latter. I've been aggressive in paying off my enormous and scary mortgage. You can lose your job at any time, you could get sick, your family could get sick, the economy could go south and living hand to mouth with a ton of debt which can be called in leaving you losing your home/car being powerless to stop it, is not for me. For me debt is a prison that makes me work for The Man forever and I want to be free of it ASAP.
Saving is a bit pointless now. I think you should have a broad base, some cash, some stocks, a solid pension base, some safe but boring funds, some paying down the mortgage and build those funds as much and as fast as you can.
Sheets Tabuer said:
Me? mortgage is 1.86%, inflation will erode the debt so I'm sticking cash in S&P 500 hoping it does about 7% a year, should probably dump it in the pension but hey ho.
If my mortgage was variable and it went anywhere near a few more % I'd pay the money towards that instead.
You could do both, in effect, of course, if you invest it in an S&P 500 fund via a SIPP.If my mortgage was variable and it went anywhere near a few more % I'd pay the money towards that instead.
Sheets Tabuer said:
Me? mortgage is 1.86%, inflation will erode the debt so I'm sticking cash in S&P 500 hoping it does about 7% a year, should probably dump it in the pension but hey ho.
If my mortgage was variable and it went anywhere near a few more % I'd pay the money towards that instead.
How many years do you have that for?If my mortgage was variable and it went anywhere near a few more % I'd pay the money towards that instead.
Obviously depends on your circumstances...and age.
The mortgage was fixed a few months back at 1.4% for 5 years. Overpay mortgage enough so its finished in 5 years. Max out pension as much as possible. Anything spare goes into stocks n shares ISA. Keep a few months outgoings as savings in premium bonds.
I could invest the mortgage overpayment in ISA, but I really want the mortgage gone in 5 years (7 years early) so I have option to retire if I wish.
You dont have to do one or the other, you can always split your cash, pay down mortgage debt whilst the going is good and invest the rest.
The mortgage was fixed a few months back at 1.4% for 5 years. Overpay mortgage enough so its finished in 5 years. Max out pension as much as possible. Anything spare goes into stocks n shares ISA. Keep a few months outgoings as savings in premium bonds.
I could invest the mortgage overpayment in ISA, but I really want the mortgage gone in 5 years (7 years early) so I have option to retire if I wish.
You dont have to do one or the other, you can always split your cash, pay down mortgage debt whilst the going is good and invest the rest.
BobToc said:
I see a widespread assumption that inflation will benefit equity markets. Not at all clear to me that’s a given.
There’s no alternative and bonds offering terrible returns are not interesting. Even banks suggest that stocks offer better hedge against inflation than fixed income investments. In my mind it depends on where you are in life and how you feel about risk. Remember things can change at any time.
If i was approaching my 50's I would be getting it payed off now as work life often changes when you get past 50.
If I was in my 30's I would be investing the cash in stocks and shares ISA's or preferably a company pension scheme.
If you feel secure in employment, or able to find alternative employment easily, invest now, if you are not keen on your career or don't really enjoy your work pay off the mortgage it is a really nice feeling knowing you don't have to earn at the same level any more.
If i was approaching my 50's I would be getting it payed off now as work life often changes when you get past 50.
If I was in my 30's I would be investing the cash in stocks and shares ISA's or preferably a company pension scheme.
If you feel secure in employment, or able to find alternative employment easily, invest now, if you are not keen on your career or don't really enjoy your work pay off the mortgage it is a really nice feeling knowing you don't have to earn at the same level any more.
I am now in my sixties without a mortgage. When younger I was focused on paying off the mortgage and any bonuses went that way, which gave us security and eventually meant we could move to a much better house, which we have recently sold and downsized when the children had all left home.
In hindsight I should have taken a more balanced approach and paid more into equity ISAs, which would have given a better return, but I am looking back with the benefit of hindsight and without the burden of a large mortgage. I also remember mortgage rates of over 15% which caused a few problems at the time.
I think a mixture of ISAs, pension saving and overpaying the mortgage is what I would do now.
In hindsight I should have taken a more balanced approach and paid more into equity ISAs, which would have given a better return, but I am looking back with the benefit of hindsight and without the burden of a large mortgage. I also remember mortgage rates of over 15% which caused a few problems at the time.
I think a mixture of ISAs, pension saving and overpaying the mortgage is what I would do now.
As others have said it's a personal decision based on so many factors such as attitude to risk, level of comfort with investing, job security, the time period, amount of debt and how much you trust yourself to save and not spend what you have saved.
I took the saving / investing route when interest rates were much higher than they are now and it was all looking good until 2008 when equity markets dropped. It took my investments savings around 4 years to recover from that and get back to where I started. I didn't invest any more during that time but I didn't sell up either.
I'm now glad I took the investing route but there have been some scary times which would have been much less scary at the time if I had paid off my mortgage instead.
I took the saving / investing route when interest rates were much higher than they are now and it was all looking good until 2008 when equity markets dropped. It took my investments savings around 4 years to recover from that and get back to where I started. I didn't invest any more during that time but I didn't sell up either.
I'm now glad I took the investing route but there have been some scary times which would have been much less scary at the time if I had paid off my mortgage instead.
Let’s be frank a repayment mortgage is an enforced savings vehicle.
For many savy individual’s and those willing to risk flogging INterest only whilst investing elsewhere can reward handsomely. However for the very vast majority most people are not great with cash / saving /investing so repayment or overpaying a mortgage is a very safe way to go about it
For many savy individual’s and those willing to risk flogging INterest only whilst investing elsewhere can reward handsomely. However for the very vast majority most people are not great with cash / saving /investing so repayment or overpaying a mortgage is a very safe way to go about it
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