No hurry to pay off the mortgage

[superkartracer]

Tony427 said:

My advice to anyone would be to pay off the mortgage as soon as you can...

Not everyone , they can also be a big driver . Being 100% debt free can make you fat and lazy .

With such low rates and 3% ( prob 5% ) inflation the debt gets smaller as the days roll on .

[gibbon]

As above, as long as you can service it its free cash, in fact, its cheaper than free cash. Borrow at 0.9%, inflation at circa 3%. Why would you pay it off?

[Tigerite]

BoRED S2upid said:

When you get a balance at a cash machine and it shows minus £120,000!

That's only with offsets against a current account (which are pretty rare anyway). Mostly you offset against an account set up with the mortgage itself, which you don't have a card for, and the balance would only show how much was in it even if it did.

[p1stonhead]

Tigerite said:

BoRED S2upid said:

When you get a balance at a cash machine and it shows minus £120,000!

That's only with offsets against a current account (which are pretty rare anyway). Mostly you offset against an account set up with the mortgage itself, which you don't have a card for, and the balance would only show how much was in it even if it did.

Interesting I didnt know you could offset against a specific account.

Can you offset against say the value of a stocks and shares ISA? Thats pretty much were most of my money is held and invested. Or do they want cold, hard cash i.e not invested money?

[p1stonhead]

http://www.bbc.co.uk/news/business-40338570

No rates rise for now anyway.

[p1doc]

I reckon rates will start to rise slowly by end of this year likely by 0.25% seeing how America raised their rate recently and I think last meeting re rates by carney was 5/3 against rate rises so starting to edge that way

[toon10]

We all have different circumstances so whatever works for the individual is fine with me. Personally, when I got my first mortgage at 25, it was a 25 year term. I would have had it paid off by now by overpaying as I'm in a much better financial position. As it is, a failed relationship, kids and a new life just started, I'm hitting 43 this month and have 19 years left on my current mortgage.

It's a lovely big family home but the mortgage is hanging over me and at my time in life, I should be looking to wind down more not working my fingers to the bone to buy the place. I do intend to over pay in the coming years to reduce the term but I have plenty of friends my age who have paid off their mortgages already. One has just bought a property to let out for extra income, others are looking to leave their stressful jobs in favour of a smaller income/easier life or working less hours to enjoy life more. I'm in it for the long slog and it's not doing my mental health any good.

I get an annual bonus which I could shove into the mortgage each year but then I also like to enjoy life by taking holidays, spending money on the kids and buying shiny trinkets that I don't need but want such as hi-fi gear and watches. If I had more discipline, I'd just plough all my spare funds into the mortgage but hey ho...

[Stuart1961]

covmutley said:

But your investment could have gone down. Although I'm with you, because if you look at past performance, your money is far more likely to grow. But still a risk.

If I was you, i would cream off that 25% profit and pay toward the mortgage though. Rinse and repeat with your initial 175k.

True it could have gone down but as with any investment there is risk and past performance is no guarantee of future performance and it does depend upon what your risk attitude is.

And yes I could cream off the 25% and reduce my mortgage.

However having spent many hours researching funds and what the investments are within the funds, I am confident that whilst some funds may go down these should be offset by those that go up. I use Buffets methodology and choose a number of funds and research them, research them again and again and then invest and stick with them and thus far it has worked...without wishing to tempt fate !

The fund that has my largest investment has increased by 1.42% today compared to my annual mortgage interest rate of 1.50%, so a no brainer, This particular fund has increased by 37% over 1 year and 103% over 3 years. You don't need to be an accountant to work out that your money is working so much harder for you with that sort of growth than paying off your mortgage with an interest rate at 1.50%.

[Jockman]

Have you allowed for a Corbyn victory in the next 12 months?

[superkartracer]

toon10 said:

I also like to enjoy life by taking holidays, spending money on the kids and buying shiny trinkets that I don't need but want such as hi-fi gear and watches..

Stick with that plan , watched my boss drop dead @ 47 within a month of being told he had cancer , rich tho.. worked his balls off and stashed millions .

[okgo]

Thinking about my mortgage some more, I wonder if offset would suit me? I have around a 250k mortgage with circa £60k in cash, I'm wondering about what I should do when mine is up for renewal as the SVR is quite a lot more than what I have been fixed on...

[bobski1]

supercommuter said:

28 now - bought at 25
260k house
144k mortgage remaining
£670 per month standard payment + £330 per month over payment.

I am in a fortunate position that I earn a good salary and my wife also works.

None of my friends earn big salaries, so my lifestyle with them is that of someone on 30k (apart from my motorbike habit/track days and holidays etc) so I normally have about £1/1.5k left each month (when I am not holidaying or excessive trackdaying...work holiday only permits so much time off). That gets split across a few funds and a bit off the top on the house.

Would like to pay it off by the time I am 35. Hopefully a few bonuses along the way can clear it down. As said above, once I have a roof over my head that is paid for it gives ultimate freedom.

£116K deposit by the time you were 25, is that through moving up through houses or is your salary just that damn good.

[superkartracer]

supercommuter said:

My lifestyle with them is that of someone on 30k

lolz.

[supercommuter]

bobski1 said:

supercommuter said:

28 now - bought at 25
260k house
144k mortgage remaining
£670 per month standard payment + £330 per month over payment.

I am in a fortunate position that I earn a good salary and my wife also works.

None of my friends earn big salaries, so my lifestyle with them is that of someone on 30k (apart from my motorbike habit/track days and holidays etc) so I normally have about £1/1.5k left each month (when I am not holidaying or excessive trackdaying...work holiday only permits so much time off). That gets split across a few funds and a bit off the top on the house.

Would like to pay it off by the time I am 35. Hopefully a few bonuses along the way can clear it down. As said above, once I have a roof over my head that is paid for it gives ultimate freedom.

£116K deposit by the time you were 25, is that through moving up through houses or is your salary just that damn good.

Sorry, that was misleading. My house was £200k when I purchased it. I have overpaid with additional money as well, where possible.

superkartracer said:

supercommuter said:

My lifestyle with them is that of someone on 30k

lolz.

Lolz? I work with a lot of people who earn the same salary as me who drive financed up Porsches, live in massive houses mortgaged up to the eyeballs. I live in a 3 bed semi and drive a van....My social activities are with friends doing things within their budget.

Edited by supercommuter on Thursday 22 June 10:28

[anonymous-user]

My IF boe tracker is baserate + .59% since around 2007. A few months before rates dropped from 4 odd% to zilch.
No point in paying it off, but my savings in the offset account are the same as the mortgage.
Just to annoy them really, i'm hoping they will do a discount deal to pay it off ! as i'm costing them money. Never know..

[Welshbeef]

Stuart1961 said:

There is no right or wrong answer as to whether you should pay off your mortgage early by way of overpayments and everyone's circumstances are different.

I have a mortgage of which £170,000 is an offset mortgage. I inherited £175,000 in the last year and could have paid off my mortgage but instead invested it in a number of funds instead.

The investment has grown by c25%+ in the last year compared to the interest rate I am paying on my mortgage of 1.50%. It would therefore be illogical for me to pay off the mortgage at this stage whilst I can get the sort of returns on the capital that I can, which still leaves me with 20%+ after paying the 1.50% mortgage interest.

In this situation why not take out he 25% gain and dump that into the offset?

Spreading the risk and depending on how things go you might clear he mortgage in very few years whilst dereiskibg all your capital then simply leave the gain invested and then it matters not.

[p1stonhead]

Welshbeef said:

Stuart1961 said:

There is no right or wrong answer as to whether you should pay off your mortgage early by way of overpayments and everyone's circumstances are different.

I have a mortgage of which £170,000 is an offset mortgage. I inherited £175,000 in the last year and could have paid off my mortgage but instead invested it in a number of funds instead.

The investment has grown by c25%+ in the last year compared to the interest rate I am paying on my mortgage of 1.50%. It would therefore be illogical for me to pay off the mortgage at this stage whilst I can get the sort of returns on the capital that I can, which still leaves me with 20%+ after paying the 1.50% mortgage interest.

In this situation why not take out he 25% gain and dump that into the offset?

Presumably the fund is still making way better returns than 1.5% so why would you divest?

[NickCQ]

p1stonhead said:

Welshbeef said:

Stuart1961 said:

There ist.

In this situation why not take out he 25% gain and dump that into the offset?

Presumably the fund is still making way better returns than 1.5% so why would you divest?

Better returns or better risk-adjusted returns?

[HaiKarate]

The MoD pay's my mortgage from my Military pension. My lump sum also paid the deposit.

[PostHeads123]

Zoon said:

bearman68 said:

and left the 1k being paid over 25 years as a possibility of cheap lending if we ever needed it). So strictly speaking we do have and pay a mortgage, but it's about £3 a month or something.

Do mortgage companies let you do this?

Yes just don't tell them during the mortgage interview, I've done it for years never been picked up, in fact I rotate the same £1600 a month for the mortgage payment. I should do more with the cash used for offset but after being burnt by the markets before and losing a lot of cash (it doesn't always go up), I don't want to risk it. With my tax situation etc I would need around 7% gross return to make it worth while.

Edited by PostHeads123 on Tuesday 27th June 11:15