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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To pay off mortgage or not

82 replies

YogaMama66 · 07/04/2023 08:35

So I’d like to pay off our (pretty small) mortgage. Purely for the joy of being mortgage free. My DH says as it’s so small, (£350 pm), it’s a bad use of money and that I’m talking about using 12k each for a ‘feeling’. WWYD? I say you can’t put a price on a feeling of freedom! We’re both late 50s for context. Not high earners, but can afford a nice life. This just would mean so much to me!!

OP posts:
GreenClock · 07/04/2023 09:23

I can see both sides. It’s head v heart as a PP said.

A compromise may be in order here. £6k each towards the mortgage, perhaps. It could be the only way to resolve it

LIZS · 07/04/2023 09:25

At the moment our mortgage fixed rate is lower than savings rate so we are keeping the balance until it comes to an end.

Timeforchangeithink · 07/04/2023 09:26

We paid ours off a few years ago after receiving an inheritance - honestly the best thing we could have done. Gives such a sense of freedom. Given DP was made redundant during COVID and I had and have again cancer it's a massive weight off our minds.

PurBal · 07/04/2023 09:29

I’d pay it off.

Spectre8 · 07/04/2023 09:31

Given your ages id like to think you have other savings too, if so then pay it off.

Or pay half off to reduce the term to complete.

The freedom and security will be worth it. Having been made redundant that feeling of having only a few months to find a job or I have no money to pay mortgage was frightening.

I've since built up 6 months of 'lost my job' money so will start to overpay cos u never know as u get older when you health may take a sudden turn.

Motnight · 07/04/2023 09:33

We have just paid our also small mortgage off. Also mid 50s. We now put the same amount of money into our savings. We had a great mortgage rate but we're still paying interest of course and it just felt unnecessary.

We have only recently had the luxury of substantial savings, the financial cushion of having access to a large pot of money was alien to us until recently.

My dh is definitely happier that we have no mortgage!

Motnight · 07/04/2023 09:34

nannynick · 07/04/2023 08:39

Paid mine off in 2014 and it is a great feeling. Even better when you get made redundant or a pandemic comes along and you do not have debt to pay.

If looking purely at maths, you can invest the money and get a higher return, long term, than mortgage interest rate, as long as mortgage rates do rise a lot.

This isn't about maths though. It is about heart - it is about feelings. It is about not owing money. It is about having financial peace - as Dave Ramsey calls it.

Love the phrase 'financial peace'.

Thisbastardcomputer · 07/04/2023 09:36

Paid ours off in 2007, it was a 20 year one taken out in 1994. I was made redundant from a long term highly paid job, international company with enhanced terms because of complete closure. Job was a highly paid nightmare.

Best day of my life

Oysterbabe · 07/04/2023 09:41

I feel similar to you.
We have a house and a flat that we rent out. We have a small mortgage on both. The way we're set up is the most sensible investmentwise. I would like to sell the flat, clear the mortgage on our home and invest the rest in a different way. I would enjoy the security of a mortgage free home even though it makes less financial sense. DH feels that as we're only 40 and both working, there's no hurry to clear the mortgages. He's right, but I feel how I feel. I grew up poor and debt makes me uncomfortable.

Original poster
YogaMama66 · 07/04/2023 10:13

Thanks for all of your comments. Our rate is around the 4% mark and we do have other savings so it luckily isn’t an all or nothing situation fortunately!

OP posts:
billy1966 · 07/04/2023 10:20

Have you life assurance attached to it?

Because if you have, it maybe very cheap for the ages you are at and keeping it going is worth it.

My friend has a morgage of £100 a month which she keeps going for this reason, combined with the cost of holding the deeds, it actually works out as better financially.

Densol57 · 07/04/2023 10:24

On those sort of figures its really negligible whether you can get 3% here as opposed to 2.19% on mortgage etc. So dont even try and justify to him the costs analysis - you are talking a cup or two of coffee a month different 😂🤣

Pay the thing off !! Be free 👏
My partner just paid his off ( about £9,000 left ) and he is sooooooo chuffed
Its remarkable how liberating it is xx

PrincessCalley · 07/04/2023 10:29

I'd definitely pay it off. We are a lot younger than you (late 30s) and plan to pay ours off in the next 3 years. I can't wait. Just the fact that we will own our own home is enough of an incentive for me.

Kentishbornknitter · 07/04/2023 10:32

nannynick · 07/04/2023 08:39

Paid mine off in 2014 and it is a great feeling. Even better when you get made redundant or a pandemic comes along and you do not have debt to pay.

If looking purely at maths, you can invest the money and get a higher return, long term, than mortgage interest rate, as long as mortgage rates do rise a lot.

This isn't about maths though. It is about heart - it is about feelings. It is about not owing money. It is about having financial peace - as Dave Ramsey calls it.

We are exactly the same! Love Dave Ramsay too, he has helped us so much. Live like no one else so you can LIVE like no one else. Nearly 10 years mortgage free and it’s amazing!

Thelnebriati · 07/04/2023 10:35

Instead of wiping out your savings could you make an overpayment each month?

712oohahh · 07/04/2023 10:41

Hi @YogaMama66, financially my figures are VERY similar to yours, except I'm single.

I paid off a lump sum 12 months ago which brought my monthly payment from £380 down to £77 a month. Since then I've plowed everything into overpayments. I've been paying £800 a month in total, so each month the actual 'mortgage' bit of the £800 decreases by a fiver or so. My rate is variable so even with the interest rate rises that £77 has gradually decreased to £40.

I've just had a fixed saver come to fruition so next week I'll be paying a £3600 lump sum to bring the total mortgage balance down to £1,600 which is about £14 a month. Then that's me done - I'll stop making over payments and pootle along paying £14 a month for the next 15 years (was initially a 35 year term).

Things worth considering...

My mortgage was an oldy worldy variable rate one so my interest rate was 6.5%. HOWEVER being old style it means I have the facility to "borrow back" my overpayments. If the shit ever hits the fan I have easy access to a large amount of money without having to apply for credit.

I can now put what I would have been paying on my mortgage into a fixed rate saver earning 7% interest.

By scrimping each month to overpay by so much I've learned more about what's necessary and what's not in life. Even thought I'll now cut back on the stinginess I would expect I'll still end up saving a good chunk more than I ever used to.

Why am I not paying it off completely?

Mainly so I have access to all those overpayments in the "borrow back" facility. If I pay it off completely it's sealed and done and I can't get them back.

Also it's good to have some sort of mortgage for 2 reasons. Whilst my bank still have a charge registered on the house it's virtually impossible for someone to 'steal' my house by deception/fraud. It also means on my credit record other agencies can see evidence of current borrowing being repaid, that I'm responsible with money. As daft as it sounds, once a mortgage is paid off and drops off your credit record there's less evidence of you being a reliable borrower. As we found, much to everyone's amusement, when my Mum, the most financially savvy and stingey person on the planet was refused a temporary overdraft by her bank.

Reasons why I overpaid rather than using it to enjoy life now even though my mortgage was only a small amount in the first place....

Because when I'm having a bad day at work, or future of job role is looking insecure it's very reassuring to know I can just pack it all in and get by on a much lower paid job much closer to home. I can retire from my stressful job earlier than planned (without drawing my company pension) and get by on pin money.

Its not just a 'feeling' now, its a feeling long term, that gives me hope every day and security. I went straight from Uni into a 'career' job,so I'm very envious of people who got chance to try out different jobs, see what fits and what they do or don't like. I'm excited for my early retirement (still 10 years away) so after that I can try out different jobs without worrying about salary being enough to pay my mortgage.

@YogaMama66 I hope my situation gives you things to chew over and ponder. I'm not saying I'm right or that you should do what I did, just what was important to me in my decision making.

Campervangirl · 07/04/2023 10:54

I had 7k left and have just paid it off, it feels amazing, I think I saved money as I'm no longer paying any interest but I'm not particularly good at maths 😜

TheHoover · 07/04/2023 10:55

er…..compromise?

Shirty48 · 07/04/2023 10:58

I think it depends on your stage of life. We doubled our mortgage rate when we remortgaged 4 years ago and have been making significant overpayments ever since. If we keep this up we’d pay it off in 3 years versus 5.5 years if we just stick with the higher monthly payment. However our children are both teens and we have realised we probably don’t have many years left them at home. So we are using our savings for some great holidays instead.

dew141 · 07/04/2023 11:00

Iwrotethelyricstoaxlf · 07/04/2023 08:36

What interest are you paying vs putting it in a savings account for a fixed period of time.

MsE has a savings vs mortgage calculator.

start there.

Please join the other mortgage thread! I feel like I'm speaking to myself. No one seems to understand the need to factor in the lost return they could have made on the money they've used to overpay their mortgage.

It's starting to drive me slightly crazy....

BessieSurtees · 07/04/2023 11:07

@dew141 what other mortgage thread? I'm currently looking at paying off my mortgage.

caringcarer · 07/04/2023 11:09

I've been overpaying for 8 years and I'm finally paying off my last payment in May. I would pay it off, the relief you will feel, would make it worth it.

DRS1970 · 07/04/2023 11:16

Pay it off. That is £350 extra in your pocket each month, to spend or save.

Keepthetowel · 07/04/2023 11:19

We paid the mortgage off, it’s an amazing feeling, you know whatever comes your way, you still have a roof over your heads.

dew141 · 07/04/2023 11:25

BessieSurtees · 07/04/2023 11:07

@dew141 what other mortgage thread? I'm currently looking at paying off my mortgage.

This one Over paying Mortgages http://www.mumsnet.com/Talk/amiibeingunreasonable/4778685-over-paying-mortgages

I'll say my piece and leave it. My mortgage is on a five year fix at 0.99% and I can get 3.5-4% on savings accounts. I'm better off not paying off my mortgage as I'm making a higher return on that money than I'm paying in mortgage interest. (You need to factor in whether you're paying tax on the interest).

I work in the investment industry so I'm happy to take on risk. I make an average of 20-30% return on my equity investments and they're tax free as they're in an ISA. I don't expect that return over the next few years but 10-15% should be achievable. I've saved thousands of pounds by not paying off my mortgage (which is interest only) and investing that money.

Rant over....