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Save or pay off mortgage?

(5 Posts)
Livingtothefull Sat 28-Sep-13 20:08:26

I have approx. £40k in savings and about £30k left on my mortgage....have been living frugally for years to both save and pay the mortgage down. But I am quite disappointed in that my savings haven't accumulated the way I hoped; interest rates being so low, the money has basically been just sitting there not doing anything much. But mortgage repayments are low too.

What I have in mind to do is pay the mortgage off and still have a £10K emergency fund, and keep saving. I am working on a contract which is due to end November....may not get another job straightaway so I will need the fund. It is an interest only mortgage so I have to pay it off. I want the security of owning the home outright

But I will probably want to re-invest in property in the near future (upgrade to a bigger home and/or a buy to let) & want to start planning to do this once I have longer term work. Would it be better to start again with a new mortgage, or keep the existing mortgage going (probably convert to a repayment) and transfer to the new property?

BikeRunSki Sat 28-Sep-13 20:12:48

I would prioritise owning my house outright, particularly if paying off mortgage still left meca decent wedge of savings.

MadameLeBean Sat 28-Sep-13 20:13:48

I would pay it off as rates are likely to rise soon

twentyten Sat 28-Sep-13 20:14:02

What about an offset mortgage? Gives you more flexibility? Especially with contracts?

Livingtothefull Sat 28-Sep-13 21:01:41

Thanks all, for confirming my thoughts on this. Yes I want to pay this off while interest rates are low....want the security of knowing that whatever happens, my home is at risk. If/when I remortgage, yes I want flexibility in repayments, again I will be trying to pay it down as quickly as poss.

I just feel that my savings are just sitting around and not 'working' for has barely appreciated at all on what was originally paid in (over 12 years).

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