Pay off mortgage with life savings

[Chompiemompie]

Hi everyone.

We have 7 years left on our mortgage and it's now down to a level matching my life savings.

Given the uncertainty around I am considering using my life savings to pay it off. This would mean I have no nest egg but mortgage free.
DP has no savings to contribute so we would be left with no rainy day funds but mortgage free.

What would you do?

Check:
Is your contribution to the mortgage ring-fenced legally in case DP leaves and claims half the house?
Any Early repayment/early redemption charges?
Are you on a variable rate? If fixed, for how long?

This!

^ This.

While I greatly do believe in emergancy funds (been homeless and completely broke before, not willing to do that with children) how long is it going to take to build a fund back if there no longer morgage payments to make?

We pay £400 so if we didnt have too pay that we have £400 extra per month, withing 6 months we would have £2,400 saved back (£4,800 in a year).

With no morgage to pay a massive outgoing is gone so if the shit hit the fan and you lost your jobs, only having to pay essentials like food and gas/electric you could string a good few months out of that to get back on your feet without the fear of losing your home.

I would (and this is what I am doing) pay off the 10% overpayments until the end of your rate fix.

And then hopefully pay off the smaller amount + early repayment charge

I was wondering the same thing as our mortgage is due for renewal next year. I was wondering how does it actually work, like do I just transfer them the money?! Do they want to know details of where the money has come from and how does anyone prove this?

The most tax efficient thing to do is save more into a pension scheme as you can take 25 percent out tax free when you retire and pay off debt then.

I'm sure tons of people will criticize this but it is just an idea

How much can you pay off each year without penalty on your current deal? I would pay that off now, and then decide if I wanted to use the repayment to reduce payments or reduce the term. I would do the same each year until it was paid off or my current deal came to an end, and then pay the rest off.
Like the others I would ring fence the money, incase you split.

The lender isn’t interested in the source of the money. Paying off our mortgage was the most liberating financial decision we’ve ever made. I’d recommend it to anyone. Obviously it makes sense to save the money that was previously used to make repayments.

I sold up & bought a cheaper home for cash.
The sheer relief now.. who could have forseen all this?

Mortgages aren't the only bills going up, I wouldn't want to be left with no buffer at all.

I was wondering how does it actually work, like do I just transfer them the money?! Do they want to know details of where the money has come from and how does anyone prove this?
I just kept doing bank transfers. There was a 10% clause but I was never pulled up on it. I think I got asked to prove where the money came from once and that was because it was a large payment rather than a £1000 one month and a few hundred the next. I took a screen shot of my savings and sent that across in an email.
It became a bit of an addiction watching the balance go down and seeing how much I could get away with not spend each month!!

I'm paying off ours in Jan - earliest I can without redemption penalties.
Without the mortgage going out then you'll have 12 x the mortgage payment in savings in just a year. Go for it I say!

Cheap money?? Have you seen the way interest rates are rising?

I’ve still got 20 years left on my mortgage and currently pay 0.97% interest. We will not cope with rates rising to 13% as some are projecting. 13% of £200k is a lot of money!

He's your DP, not DH, so no I wouldn't do it. If you split you sell the house, get half the equity each and you've got your savings still.

Nope. You never know what is around the corner. Keep some savings.

It's what I did. Paid off the mortgage and then quickly built up some savings as I had no mortgage repayments.
The relief is tremendous, you feel in control and own your own home completely, it's a wonderful feeling. I haven't regretted it for a second and it was the best thing I've done.

I would pay it off, then take a second job and work my socks off for a while to accelerate rebuilding a good rainy day fund.

So we don’t know what’s round the corner, but if we own our home mortgage free then there is security round the corner.

if the savings are sat in a bank they aren’t earning much more than 2% interest, if your mortgage is fixed at 1.79% then it’s really not much difference

if you lose your job you can look at job seekers, which isn’t means tested but reliant on NI contributions.

at least then though, your rent and mortgage free

and as pp have said you can put the monthly mortgage psymrr et it’s into savings, which will quickly build up

I didn’t notice the DP when I replied earlier, definitely hang on to your savings.

Never leave yourself with No back up fund, what if the central heating system packed in ? 2k boiler
big car breakdown bill
While I wouldnt advocate not having savngs if the mortgage was paid off I wouldn't fret over the 'what if's'

Within a month op will have started saving again plus what would have been her mortgage payments saved. If the boiler or something did go I would put it on a credit card and have the interest free payment time and then pay it off before the intest is due with savings or transfer to an interst free card.

I would suggest considering your ability to raise £20k at short notice in an emergency (not too difficult if you have your house as collateral and you're working, not so easy if you have had an accident/become ill or disabled and aren't working) for whatever you may need it for (repairs, adaptations)/
How much of a risk do you consider this based on your age, state of health etc.?

I would also look at how secure you consider your jobs are - the sectors you work in, the likelihood of them being impacted in a recession, what your employers value (young/older staff, inexperience to be moulded/experience to be paid for) and what might happen if one or both of you are made redundant.

And finally, as you seem to be saying this is your savings rather than your partners, may be think about what would happen if your relationship were to fail. These are tough times we are living in which makes people more inclined to say 'fuck it' when the chips are down. What happens if he leaves you? What happens if you leave him? How will you move forwards if all your money is tied up in property? Maybe consider what can be done legally to protect your money as you don't seem to be married?

There is ultimately no right or wrong to this kind of situation. Whatever you do, go into it with your eyes open and make sure you have considered what the negative consequences might be.

I would overpay the mortgage every month from your savings if your lender allowds you to do this.,

Defo the offset mortgage

I would pay it off. I paid my mortgage off 7 years early and it felt very liberating,