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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

To pay off £13k mortgage?

209 replies

shookitoff · 05/04/2022 09:28

We’re both mid 40s, have overpaid mortgage for years through increases in salary and saving. It has £13k left so payments are about £80 per month. This is obviously really affordable but on an emotional level I’m drawn to the idea of paying it off in full and being mortgage free.

Any advice? Has anyone fully paid their mortgage off and do you feel it’s worth it compared to having a small mortgage?

Thanks

OP posts:

LndnGrl · 05/04/2022 09:29

I'd pay it off and be done with it, you never know what can happen in the future.

Squeezita · 05/04/2022 09:31

If you can afford it, go for it. Congrats!

We have 20 years at £1800pm left, for a terrace.

Aria2015 · 05/04/2022 09:31

Personally, I'd keep the money saved (probably spend some of it!) and just pay £80 a month. But then I've never over paid my mortgage or been great with saving so you probably should listen to me!

Obelisk · 05/04/2022 09:32

How's your pension looking? Worth considering whether you'd be better off putting £13k into that and getting the tax relief. But I definitely get the emotional pull of being mortgage free!

Londongent · 05/04/2022 09:34

I'd probably pay it off as soon as there are no early repayment charges. Unless you are thinking of doing any improvement works and want to take out additional borrowing on your mortgage

irregularegular · 05/04/2022 09:36

Depends on the interest rate you are paying versus the interest you are earning on the 13K. Probably the first is higher, but maybe not much? Keeping the mortgage gives you more flexibility to pay off as and when you want. Once the money is gone into paying the mortgage off, you lose the flexibility. Someone else said you don't know what can happen in the future - that is a reason to NOT pay the mortgage off and hang on to the 13K.

The amounts involved here are pretty small though, so depending on your circumstances, possibly doesn't make much difference one way or another.

In short, if you have plenty more savings in addition to the 13K then I'd probably pay off. If not, I'd hang on to your savings.

thisplaceisweird · 05/04/2022 09:36

Do it! It's not just the 13k its all the extra bits of interest that you're also paying by holding off.

Scottishflower65 · 05/04/2022 09:38

The mental relief is worth it!

Aprilx · 05/04/2022 09:39

I paid of my mortgage when I was 43 and it was great to feel that whatever happens at least I have a roof over my head paid for. We saved and saved up and paid it all (about £200k) off at once though.

I think being down to the last £13k is not that much different to being mortgage free though. So whether I would pay this off or not would depend on other factors, if it were my only or the bulk of my savings, then I think it would be better to keep it more liquid.

Chely · 05/04/2022 09:42

If you intend to stay there for the foreseeable... pay it off and enjoy being mortgage free.

So many would love to be living that dream

TheYearOfSmallThings · 05/04/2022 09:43

I would pay it off, even if there are more shrewd things to do with the money. I can honestly say that the peace of mind of owning the house is priceless, and worth more than any marginal financial gain from doing something else with that relatively small amount.

Abouttimemum · 05/04/2022 09:48

Yeah we paid ours off about 7 years ago through doing the same / offset mortgage. We had no early repayment fee so paying it off was better than the low monthly payments which were still paying off interest. Get it done, it’s a weight lifted.

Rayna37 · 05/04/2022 09:50

I can definitely see the appeal. However If you've prioritised mortgage overpayments over savings and pensions, it wouldn't make sense. How much of a "rainy day" fund would you have left- if it's a month, no, if it's a year, maybe, though it would still most likely be better value to put it into your pension for the tax relief and compound interest and keep the cheap debt. Also does the house need any work? Do you need to keep a fund to spend on the bathroom/kitchen/garden/carpets in the next few years?

HomeHomeInTheRange · 05/04/2022 09:50

The mental relief of having a good pension v a tiny mortgage on a low interest rate?

Given that the gvt give us the tax back on pension contributions?

What would you be left with in terms of a rainy day fund if you use the £13k?

ithoughtisawapuddycat · 05/04/2022 09:51

I got given some money when I was 39 and we had £14k left on our mortgage. Payments were £200 a month, never over paid and so we paid off the mortgage.

The feeling of knowing we own our home outright is wonderful.

I'd say do it.

Original poster

shookitoff · 05/04/2022 09:52

Thanks so much for the replies! I can see it’s almost half saying pay it and half saying don’t! We do have savings so no issue there. Interest rates are so low the mortgage costs us more in interest, though not a huge amount. There is no repayment penalty as it’s on a variable rate.

OP posts:

Mindymomo · 05/04/2022 09:53

I always assumed it would cost me to pay off our old endowment mortgage as this is what was always quoted to me, but wasn’t true. I now wish we had paid it off sooner, as endowment didn’t cover full cost of mortgage. I would want to keep 6 months money of salaries in bank, but yes I would definitely pay it off if you can. It’s a great feeling to be mortgage free.

edwinbear · 05/04/2022 09:54

Depends on how much it would leave you in savings. If it leaves you with no savings, I'd probably just increase the amount you pay each month to say, £200-£300, or whatever you can afford.

maartjebaabes · 05/04/2022 09:55

Paying off the mortgage is like a totally risk free tax free deposit with a rate higher than you could get anywhere. Definitely worth it.

Original poster

shookitoff · 05/04/2022 09:56

We would have about £20k in savings left plus some savings for the kids education.

OP posts:

burnoutbabe · 05/04/2022 09:56

i had ages of having a very low mortgage rate (BR+0.25%) and higher interest on my savings so i overpaid the savings, not the mortgage

But at some point they equalised as savings rates plunged. So i took the cash savings and paid it off.

It did feel a happy point. (and i was also saving into pension/equity shares)

So for £13k, i'd pay it off and be clear. Assuming that £13k isn't your only emergency money (i had E cash seperate from POT TO CLEAR MORTGAGE)

Caspianberg · 05/04/2022 09:58

Pay it off

Or if you think you might need some of that for things like new boiler/ solar/ renovations, pay off say £6k now. Then get monthly payments increased to £300 or similar and you would still pay it off quicker

BarbaraofSeville · 05/04/2022 09:59

Do you have other savings and investments? What would happen if you needed to replace your car or repair the roof?

The interest rate on your mortgage should be lower than available borrowing elsewhere and also beatable by low risk investments over time.

'Saving thousands by overpaying your mortgage' isn't a thing at the moment, it's a psychological choice that can be quite costly in terms of lost investment growth and tax relief if you put the money in a pension instead.

17caterpillars1mouse · 05/04/2022 10:00

I would pay it off. It's the dream to be mortgage free

Original poster

shookitoff · 05/04/2022 10:00

I’m hoping to develop my understanding of investment and do some of that once it’s gone but I have I’m extremely risk averse due to the financial issues I experienced in my family as a child so I’ve kind of made a deal with myself not to invest until after the mortgage is gone. DH and I both have work pensions.

OP posts:

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