AIBU to be nervous about paying the mortgage off!

I became mortgage free aged 40. I got a deal to overpay. Each year I probably about 8 months of payments.

Turned 40 in lockdown. Couldn’t do much. Mortgage balance was £4.8k. Parents paid that off for my birthday.

This helped a lot during the 13 months of unemployment.

One thing to rebuild a good nest egg quickly is to keep saving like you currently are, and add the mortgage payment amount to that, for an extra 6 months. You’ll be amazed how quickly that will rebuild a good buffer for you. And at the end of the 6 months, re-evaluate and think about how much you want to regularly put away and how much you want to put into everyday spending or more “treat” type short term savings (so not just having an emergency fund, you also get a holiday or theatre trips or replace the car….or whatever, fund). And how much you want to just put into your everyday spending budget.

But take the first few months to rebuild a buffer before making major changes. At least in terms of the monthly mortgage payment amount.

Everyone wants to pay off the mortgage and to feel fully free of it - I know, I know! - but It can be a good idea to keep a mortgage open in case you should need to borrow money, because it's a cheaper rate than other forms of borrowing and usually quite simple to increase the loan with your present lender. So you could pay off most of it but keep a few thousand in it still while you can build up your savings at the same time.

An alternative is that you pay off the mortgage completely and then save the amount you would be paying monthly if you kept the mortgage. How quickly your savings build up will of course depend on how big your monthly mortgage payments are. And in the meantime you rely on your emergency funds to cover unforeseen events.

Im not so sure that it’s only mortgage rate against interest rate. I would also consider if you might need money for something in the next 24 months, borrowing is always more expensive. Also the allowed ISA amount is going to be less so if you will take money out of ISA now to repay your mortgage it might be not in your interest in the long run. There is always possibility to pay some of mortgage off and keep low enough monthly payments but still keeping some savings.
is it certainly 5.01% ?

I paid mine off, then paid off a funeral for both of us then unfortunately became very ill with a very bad break down. I had to leave work but having paid of the mortgage made such a difference. It took the worry of being homeless away which was a huge relief.

I would pay it off and then save the mortgage payments to build back up my pot for the next couple of years

I know what your mean - I like to maintain liquidity for those just in case moments.

You could get a 0% credit card and put your groceries on it for a few months to help you build your savings pot and maintain your liquid funds. If it’s just groceries, you wouldn’t spend more than normal.

i think mortgage is good debt personally and boosts your credit rating.

To each their own though, well done Op.

Do it. It’s fabulous to have the extra money (from mortgage payments and saving up) each month.

And well done.

You don’t need to pay it off let it go into tracker and keep 10k in savings and pay the rest of the postage off over two years

When I first bought this house I got a 5 year fixed deal.
I've just signed up to another 5 year fixed deal with same lender.
I just wonder if that same lender will always offer me a fixed deal when my one runs out or if there's ever a time when they don't

My fixed rate ends at the end of this month. I have arranged a new 5 year fixed rate with the same lender, not quite as good a rate as I’m on now, but still low enough to be able to over pay so that, hopefully, by the time that’s coming to an end, I will have actually paid it off 🙏🏻

Pay it off. You make the repayments out of taxed income, so a £1000 mortgage payment costs you £1200.00 even if you’re a basic rate payer. Do it. We did and it allowed us to make significant choices a few years later

We’ve just paid ours off two years early, we only owed £10k, but even so I did feel a bit anxious transferring the money, but have just put my first payment back into my savings to start building them back up again. Feels good to completely own the house.

I'm a massive fan of paying off mortgages early. DO IT! You'll feel amazing after - trust me!

Treat yourself to a nice meal out the day you pay it off, or a new outfit or something. You'll get your savings built back up again after.

This!

Then put the monthly mortgage amount you would have been paying post November (at the current rate you do now) into your savings. Start building your pot again, whilst knowing you have secured a roof over your head for life!

Ok thanks

I just wondered if the same lender that you're with has always offered another fixed rate at the end or if there's times where they don't offer that

Paid ours off a few years ago, I was in my late 40s - it gave an amazing sense of freedom.
I don’t worry about work anymore, if I ever get made redundant, or get fed up I can take a lower paying job, and still afford to live.

i have a home, nobody can take it off me, and it means my daughter will always have a home.

We paid our mortgage off early, and it didn’t take long to build up significant savings as we weren’t paying the mortgage anymore. We paid it it off in an about a third of the initial term, and also saved about £90k in what we would have paid in interest!

before anyone asks, no we didn’t have inheritance or a windfall. Small house bought cheap, didn’t move, and got better paying jobs so plowed it all in. 35 year term paid off in 12

I would go against the grain here, and compare what rate you can get on a mortgage versus what you could save your money at.

I borrowed extra £20k on our mortgage in 2023 and I have been making more money in savings than it is costing me every month since then. It isn't much, but I'm making about £500 a year on it I reckon.

I'm not sure what the draw is to having so much of our wealth tied up in illiquid assets.

I’ve always had fixed rates, usually 2-3 years. At the end of each fixed term, my mortgage would default to the bank’s standard variable rate. So about 3 months before the fixed term ends, I use a mortgage broker to look at alternatives.

The feeling of utter relief and security when you make your last ever mortgage payment is incomparable. Just direct debit your current mortgage payments into an ISA, you’ll soon have decent savings again.

Well done OP. You will soon build up some savings again when you have no mortgage to pay.

Well done! Congrats! A huge achievement. Buy yourself a bottle of champagne at Asda (current cost £15 and it’s won awards)

Can I ask people on this thread

Whenever your fixed rate has come to an end

Have you been offered another fixed rate? Or has the bank not offered you a fixed rate ever?