I'm able to pay off my Mortgage, any reason not to?
Discussion
Due to unfortunate circumstances, I can pay off my mortgage next month in full.
is there ANY reason not to ?
Circumstances: Settlement is from my wifes life insurance. (paying this won't clean me out)
My will has already protected half of my future inheritance for my kids.
I have a new partner, we don't live together yet.
We may well buy a place together when my adult kids leave home.
I'm self employed so can't move onto a new deal, I've not been doing this for long enough, although I am earning a good wage.
Is there any reason to leave the mortgage open with say a balance of £100 ? (current balance is 70k - no penalties for repayment)
I will of course take any suggestions to my mortgage / financial advisor pretty soon, I just don't even know what questions to ask?
Many thanks in advance.
I have read other threads with the same title here, but as circumstances are a little different I hope y'all don't mind asking again.
is there ANY reason not to ?
Circumstances: Settlement is from my wifes life insurance. (paying this won't clean me out)
My will has already protected half of my future inheritance for my kids.
I have a new partner, we don't live together yet.
We may well buy a place together when my adult kids leave home.
I'm self employed so can't move onto a new deal, I've not been doing this for long enough, although I am earning a good wage.
Is there any reason to leave the mortgage open with say a balance of £100 ? (current balance is 70k - no penalties for repayment)
I will of course take any suggestions to my mortgage / financial advisor pretty soon, I just don't even know what questions to ask?
Many thanks in advance.
I have read other threads with the same title here, but as circumstances are a little different I hope y'all don't mind asking again.
Edited by Slyjoe on Thursday 16th January 11:10
The old one used to be that the bank held onto the “deeds” when you had a mortgage which may still be the case but I think all new houses have digital deeds held at the land registry instead now.
Maybe something like if you’ve got no other credit it might show you can make a monthly payment?
Can’t think of any others really.
Maybe something like if you’ve got no other credit it might show you can make a monthly payment?
Can’t think of any others really.
If you keep the mortgage going, is there the possibility to claim back any of the payments in case you need cheap credit in the future?
So, if you pay it all off bar £100, could you reclaim £20k of the overpayment next year to buy a car/extension/big holiday? That way you will only be paying the mortgage rate of 3/4/5% rather than "normal" loan rates
So, if you pay it all off bar £100, could you reclaim £20k of the overpayment next year to buy a car/extension/big holiday? That way you will only be paying the mortgage rate of 3/4/5% rather than "normal" loan rates
Think about things as a whole, in the long term.
It may be worth considering your balance of mortgage/pension/other.
Personally I had an offset mortgage, so could avoid the decision while having a suitable stack of savings accessible without having to apply for a loan or anything.
Having no mortgage is nice, but it's also nice to not have to worry if self employment has a few gaps, to have opportunities to invest in your business, take time to retrain, be ill, send your kids to private ed, whatever.
It can be the obvious way to save interest or it can be a big decision that shuts down lots of options.
It may be worth considering your balance of mortgage/pension/other.
Personally I had an offset mortgage, so could avoid the decision while having a suitable stack of savings accessible without having to apply for a loan or anything.
Having no mortgage is nice, but it's also nice to not have to worry if self employment has a few gaps, to have opportunities to invest in your business, take time to retrain, be ill, send your kids to private ed, whatever.
It can be the obvious way to save interest or it can be a big decision that shuts down lots of options.
Slyjoe said:
I'm self employed so can't move onto a new deal, I've not been doing this for long enough, although I am earning a good wage.
You should be able to change product with your existing mortgage company without any further underwriting. It's not a large mortgage, it depends on what will make you happier - the thought of being mortgage free, or having a chunk of money in the bank and potentially making more money through savings / investments.
Thanks so far, all. I have a good chunk in savings, and investments, cars are paid for, and the self employment seems to be stable (contract designer).
I just assumed as I didn't have two plus years of accounts I'd have to move onto the standard variable rate of 8% if I didn't settle.
I can't see having to borrow more money in my lifetime, I'm 55 with some pensions, although not huge.
I think considering where my partner and I have been in the last few years, we've given a nod to our mortality, and intend to live vicariously until we are 70ish and then watch telly
I just assumed as I didn't have two plus years of accounts I'd have to move onto the standard variable rate of 8% if I didn't settle.
I can't see having to borrow more money in my lifetime, I'm 55 with some pensions, although not huge.
I think considering where my partner and I have been in the last few years, we've given a nod to our mortality, and intend to live vicariously until we are 70ish and then watch telly
Sheets Tabuer said:
I was told many years ago a very small mortgage is better for your credit report than none at all, dunno if that's still the case but worth looking in to.
I've paid off two mortgages with no change to my credit scores. I appreciate there's more to a full credit rating than the Clearscore and Experian numbers, but it didn't seem to make any difference to me.I believe the standard advice is to compare your mortgage rate to what you'd earn investing the money. The latter is likely to be more than the former. Then work out what not-having-a-mortgage is worth to you.
There's an emotional thing about paying off the mortgage that's hard to quantify. I'd personally rather pay off the mortgage unless my mortgage rate was lower than what I could earn in savings, taking into tax on savings etc. If it was paid off I'd put any spare money into a combination of ISAs or pension with a pension offering tax advantages.
RizzoTheRat said:
What's your mortgage rate compared to what you earn on the money else where (less tax). If you have a 1.5% mortgage and can earn 5% in the bank it's not worth paying it off IMO.
It jumps to 8% in March - the standard variable rate, I'm not sure I can get a cheap mortgage due to the short term of self employment.ISA saving are currently 5%
Edited by Slyjoe on Thursday 16th January 11:47
Sheets Tabuer said:
I was told many years ago a very small mortgage is better for your credit report than none at all, dunno if that's still the case but worth looking in to.
That's a bit of an urban myth these days.Just pay the mortgage off and feel the sense of relief at not having it burdening you any more. Which is a bit of an emotional view - but given where interest rates are, I'd just clear the mortgage, IMVHO.
I think the summary of the above is that there isn't any compelling reason NOT to pay off the mortgage. You could do other things with the money, like invest it if the % return is better, but given that you have said that you already have savings/investments/pensions, this may not matter too much to you. £70k isn't a huge sum on which to be missioning out on this % difference in any case.
You could see paying off the mortgage as a way of diversifying how your money is invested.
I paid off my mortgage about 20 years ago and have benefitted from the peace of mind that provided as a result. In the interim years my financial and employment situation was somewhat less secure than yours sounds, so I have been happy with that decision.
Is there any risk that if you split up with your new partner that she'd end up with half of this money? Is that a risk? I suspect that there isn't much difference in the level of such a risk whether the money was in the house or in than bank/investments anyway.
You could see paying off the mortgage as a way of diversifying how your money is invested.
I paid off my mortgage about 20 years ago and have benefitted from the peace of mind that provided as a result. In the interim years my financial and employment situation was somewhat less secure than yours sounds, so I have been happy with that decision.
Is there any risk that if you split up with your new partner that she'd end up with half of this money? Is that a risk? I suspect that there isn't much difference in the level of such a risk whether the money was in the house or in than bank/investments anyway.
rlg43p said:
Is there any risk that if you split up with your new partner that she'd end up with half of this money?
When my wife passed away I had a will written that protected my wifes half of our wealth for my children, in the event I re-married or had other kids.The other kids won't be an issue
We don't live together yet, but we've spoken about buying together in the future (mortgage free), I guess we draw up another will at that point which will be mutually agreeable, to us as well as our respective families.
This https://www.whitecoatinvestor.com/10-reasons-to-pa... might give you some food for thought
Sheets Tabuer said:
I was told many years ago a very small mortgage is better for your credit report than none at all, dunno if that's still the case but worth looking in to.
I paid off my mortgage at the beginning of last year (partially due to the same reasons as the OP) and just applied for an interest free CC for a few highish value purchases. It doesn’t seem to have affected my credit rating especially I made the decision to pay mine off a couple years back.
There’s loads of people give reason not to pay it off, certainly if I’d gambled the money on the stock market I’d be in a better position financially but I’m never good at gambling.
There’s also no feeling like owning your own home, knowing no matter what it’s yours. I definitely sleep easier at night when I’ve got no bills to pay.
I’d say I’d you can then why not.
There’s loads of people give reason not to pay it off, certainly if I’d gambled the money on the stock market I’d be in a better position financially but I’m never good at gambling.
There’s also no feeling like owning your own home, knowing no matter what it’s yours. I definitely sleep easier at night when I’ve got no bills to pay.
I’d say I’d you can then why not.
Sheets Tabuer said:
I was told many years ago a very small mortgage is better for your credit report than none at all, dunno if that's still the case but worth looking in to.
Mine shows low impact on my credit score for having no mortgage, I’m still 999 on experian. More to the point however, once you are clear of the mortgage, gained your financial independence, a credit score is completely irrelevant as you’ll not be applying for any ever again.
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