Is it wise to pay my mortgage off?

[MrOrange]

I have a under £200k left on my mortgage (45% LTV). I have a little more than that in various savings accounts and the like, mostly earning 1.3-1.5% - all self-managed.

My fixed rate (currently 1.3%) comes to an end in Jan next year and I guess my rate is going to go up so is it wise to pay some or all of the mortgage off then. Wife & I are both higher rate tax payers btw and 50 years old (if that makes a difference), and no plans to retire in the next 25 years. We are in our “forever” home.

I’m torn between being mortgage free, and having a (possibly somewhat ridiculous) buffer that just seems to keep growing. Or should I contract the services of an independent financial advisor (shudder)

[Dixy]

If you pay it off you still have the buffer it just requires drawing down. the effort required to ensure you get as good a rate as you pay is not free. The feeling of being mortgage free is superb.

[Stella Tortoise]

Have you looked at an offset mortgage?

[DB4DM]

Dixy said:

The feeling of being mortgage free is superb.

+1

[CAPP0]

Stella Tortoise said:

Have you looked at an offset mortgage?

Would also recommend this option. I have more savings than my mortgage, both with the same bank and therefore my mortgage is close to interest-free - I'm paying zero interest on the mortgage and foregoing the piddling amount of interest currently on offer.

I too could pay the whole thing off, but with this arrangement I have instant access to all of my capital rather than a mortgage-free house and saving it back up again. And I know that I could pay the mortgage off tomorrow if I wanted or needed to.

[The Leaper]

We had a 25 year repayment mortgage which I paid off after 10 years by regularly increasing the repayments each year rather than by a lump sum. Saved a huge sum of money and became mortgage free some years before I retired. Was a great plan, for us, but may not suit everyone.

R.

[grahamm]

I am not qualified to give advice but if in your situation would be putting money in equity ISAs

[Derek Chevalier]

MrOrange said:

Or should I contract the services of an independent financial advisor (shudder)

I think it would be something worth considering

[ellroy]

So you’re getting about 1.3% gross from savings and paying out 1.3% net on your mortgage?

Seems a fairly obvious thing to repay some to me.

[gazza5]

If I was in your shoes, I would probably repay half, remortgage the other £100k, start by putting 20k in a stocks and shares isa each, and maybe leave the rest in a fixed account.

You can earn way more interest than 1.3% by locking some money away for a year - my missus has £20k with charter bank I think it is earning 2% over a year - done through hargreaves lansdown active saver account, she also has a stocks and shares isa with them (so do I).

[Somebody]

If normal mortgage, pay it off as the mortgage rate has got be be higher than any savings rate that you have (1.3% - 1.5% gross)?

Another vote for offset mortgage.

[anonymous-user]

paid off my mortgage at first opportunity 12 or so years ago. Never regretted it, gave me all sorts of opportunities to do other things, now have 3 properties, all mortgage free, one home, one retirement destination and one BTL

[Derek Chevalier]

Somebody said:

If normal mortgage, pay it off as the mortgage rate has got be be higher than any savings rate that you have (1.3% - 1.5% gross)?

There may be better options.

[Dixy]

Ask yourself if you were mortgage free would you take out a large mortgage to invest it in low risk low return investments.

[GT03ROB]

I do a combination of all of the suggestions above. So I have an offset account, then maintain a chunk of cash in liquid savings account to use as offset. I then overpay each month in addition. Finally I stick a chunk monthly in an ISA.

[SpeckledJim]

Pay off half the mortgage, and buy a Ferrari F355 to mothball.

The generation who had it on their bedroom walls are coming into their earning prime, and quickly closing in on their first mid-life crisis.

[SpeckledJim]

Dixy said:

Ask yourself if you were mortgage free would you take out a large mortgage to invest it in low risk low return investments.

Well put.

[Derek Chevalier]

anonymous said:

[redacted]

Risk free may not be the preferred option

[jonny70]

MrOrange said:

I have a under £200k left on my mortgage (45% LTV). I have a little more than that in various savings accounts and the like, mostly earning 1.3-1.5% - all self-managed.

My fixed rate (currently 1.3%) comes to an end in Jan next year and I guess my rate is going to go up so is it wise to pay some or all of the mortgage off then. Wife & I are both higher rate tax payers btw and 50 years old (if that makes a difference), and no plans to retire in the next 25 years. We are in our “forever” home.

I’m torn between being mortgage free, and having a (possibly somewhat ridiculous) buffer that just seems to keep growing. Or should I contract the services of an independent financial advisor (shudder)

Very difficult to answer without knowing more of your financial Circumstances.

Would it be all your savings in to your mortgage?
How safe is your employment ?
Do you have adequate pension savings ? Your a 40% taxpayer you could turn this 200k straight into 320k before investment growth putting in a pension?

Do you have other investment that you could add the money too ? (Example stock market index’s/funds that have been preforming well)

Remember your borrowing the money at 1.3% and inflation is 2.6% so so effectively your debts are deflating by 2.6% a year so could this money be put to better use ? (Obv have 200k in cash returning 1.3% is a similar problem )

[p1doc]

gazza5 said:

If I was in your shoes, I would probably repay half, remortgage the other £100k, start by putting 20k in a stocks and shares isa each, and maybe leave the rest in a fixed account.

).

this is what I have done with similar figures now much smaller mortgage and can still pay it off with savings if I want to security both ways