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AIBU to want to pay off as much of mortgage as possible?

(55 Posts)
SoMuchPain Sun 12-Mar-17 08:48:41

We're in a situation where we have 2 years left on our mortgage (it's a 5 year fix). We were discussing yesterday what to do wish a small inheritance (5k) I suggested we pay off our mortgage (or a very small part of our mortgage).

DH undecided - if we can save a little more perhaps considering buying another property but I think while we have a low rate let's pay off as in 2 years time with Brexit looming who knows what will happen with interest rates? We have no other debts.

AIBU? What do you think will happen to interest rates because of brexit?

CasperGutman Sun 12-Mar-17 08:52:43

When you say you have two years left on you mortgage, do you mean that you only have two years of payments left to clear the debt? Or do you mean the fixed rate has two years left, then you'll be on the standard variable rate?

BWatchWatcher Sun 12-Mar-17 08:54:02

Put it on the mortgage!

ememem84 Sun 12-Mar-17 08:56:09

id put it against the mortgage. Pay that sucker down.

wiltingfast Sun 12-Mar-17 08:56:25

If it is fixed there will be a penalty to pay it off earlier or even putting in an extra payment.

Better check that before you decide.

SoMuchPain Sun 12-Mar-17 08:57:18

We have two years of this fixed rate left then we need to re-mortgage. Yes mortgage is the right thing to do.

I don't know what will happen with rates in the next two years either. Plus we can only pay off a small amount i.e. 8k a year without incurring a charge

BarbaraofSeville Sun 12-Mar-17 08:57:32

Do you have the time and energy to be landlords? Do the numbers stack up?

Do you have other savings? If not it might be best to save some so you have money available if you need it?

Crumbs1 Sun 12-Mar-17 08:59:07

The quicker you pay off the mortgage the better. 5K isn't enough to buy another property to let out, to be honest. If it were 50k I might think differently but not with that amount.

SoMuchPain Sun 12-Mar-17 09:02:12

We might get more money later in the year depends on a number of factors. Either way I think with inflation and crap savings interest rates we are still lots better off paying what we're allowed on the mortgage. I doubt we would get much more. £5k is the minimum we've been told at the moment. But I don't think it will be much more.

Also it's my DH inheritance so his choice but we generally decide financial matters together

NerrSnerr Sun 12-Mar-17 09:02:21

Will you be charged an early repayment charge though? If it's fixed term it might not be worth it because of extra charges.

SoMuchPain Sun 12-Mar-17 09:03:02

NerrSnerr we have around £8k we can pay without a penalty

delilahbucket Sun 12-Mar-17 09:03:26

What is your mortgage interest rate? If it is lower than what you could earn on the £5k then save the money and pay it off the mortgage later.

PurpleDaisies Sun 12-Mar-17 09:05:53

Who has he inherited the money from? If it has come from someone close I'd think about using part of it to buy something to remember then by. We bought a dresser when my nan died.

I'd pay the rest off the mortgage (or any other debts).

SoMuchPain Sun 12-Mar-17 09:07:43

Yes that was our idea something to remember the person by - it's a close relative who was a teacher so we thought something to do with education for our children.

Our rate is 3.1%

SoMuchPain Sun 12-Mar-17 09:08:09

No other debts

AnoiseAnnoysanOyster Sun 12-Mar-17 09:09:52

You can get another fixed rate after, we did.

SoMuchPain Sun 12-Mar-17 09:11:02

My concern is any new fix the rates maybe higher than we have now. So it's better to pay off now?

EssentialHummus Sun 12-Mar-17 09:11:14

Straight onto the mortgage, even small amounts soon add up. I overpay by £50 per month- it'll take two years off my term.

icy121 Sun 12-Mar-17 09:11:33

I wouldn't bother with a BTL. The SDLT changes combined with no longer being able to offset mortgage interest mean that it's becoming more and more of a tax- inefficient way to invest. Are your ISA's filled up? If not stick it in there, otherwise pay down the mortgage!

PoorYorick Sun 12-Mar-17 09:13:23

We were in a similar situation and were advised to put it in the mortgage.

ScarletFever Sun 12-Mar-17 09:14:43

Do you have savings? Have you got a safety net in case you / DP become unemployed?

BarbaraofSeville Sun 12-Mar-17 09:15:50

Save half, put half on the mortgage. Tesco pays 3%, so interest is just about equal anyway.

Depending on your loan to value, reducing your mortgage balance may entitle you to a better deal when you renew your deal.

liquidrevolution Sun 12-Mar-17 09:16:14

Mortgage definitely.

Am currently banging my head against a brick wall trying to explain to my DH that the large amount sitting our account is not earning any money and we would be better off paying a chunk of the mortgage. Am slowly losing the will to live tbh.

SoMuchPain Sun 12-Mar-17 09:17:28

We have a safety net but perhaps not very much - we should perhaps save some

We hold the savings in premium bonds

ThisNight Sun 12-Mar-17 09:18:07

I found this really useful - I decided to make regular overpayments, and recently paid a lump sum - I have shaved 9 years off the mortgage.

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