AIBU in thinking no point in being mortgage free

[Tunaormayo74]

My husband and I want to be mortgage free and could pay it off when we are in our 50s and 60s respectively. However, I don’t see the point. All it means is that we will have less disposable income now but no better off when we retire. The only way it makes sense is to downsize when the mortgage is paid and use the equity to afford holidays, etc but why not enjoy the holidays now rather than when we are older? If we stayed in the property we are working hard to pay off the mortgage for, all that will happen when we died is the government will take a huge chunk of the equity in inheritance tax.

Am I being unreasonable to think there is no point in paying off your mortgage early if it means you’ll be in your late 50s or over?

I can’t wait for our mortgage to be paid off. I should be mortgage free by the time I am 50 which will be a good place to be in.

We overpay but not the the extent that it impacts our day to day lives / holidays etc.

Being mortgage free will mean having an extra £1000 per month so we will be significantly better off and will have more disposable income to spend on nicer holidays etc.

No guarantee we will have more disposable income when DH retires as he will be near that age. Also how long will we be in health to enjoy and what will happen to all the equity gained from paying less interest? Inheritance tax? Payment for care?

It depends what you consider enjoying life to look like. I'd rather potter round the national parks free of charge and not have to work a challenging job rather than staying corporate into older age and taking nice holidays abroad to get away from the stress.

The sooner you are mortgage free the sooner you build up money. Think how many jove holidays you could afford if you stayed working but didnt have a mortgage.

You arent nececessarily going to be in poor health or drop down at retirement. My in laws are 70 something and go on walking holidays, my friends parents are late sixties and took he grandkids to Disney world.

Balance enjoying kore active things now and pay down the mortgage while you are able to continue working.would be my advice. The smaller the mortgage the less you need to earn so you can reduce hours, change jobs etc. Enjoying life isnt always about holidays and paid activities. Plus you'll get senior discounts!

I had started to try and pay my mortgage off early by over paying £400 a month but it meant I had no spare money no and couldn’t do anything fun and constantly worried about increasing bills.

I’ve now reduced to just £100 overpayment after thinking the same as you.

I agree and have this opinion when I read how some invest everything now into their retirements. My mum died just at pension age, she didn’t have a private one though. I also work in healthcare so see how a long life isn’t just the only outcome.

I have a very average salary but we still enjoy life and can still overpay too. The overpayment would go or be reduced if we started to struggle and our enjoyment of life today would be affected. That’s very important to me.

I’ve never understood that either. Unless you already have a fortune tucked away somewhere, the knowledge that no unforeseen circumstances (job losses, ill health, etc) will leave you worrying about paying your mortgage is absolutely priceless. I never worried about it through Covid, or CoL rises, I don’t have to concern myself with mortgage rates or trying to get better mortgage deals. I see no disadvantages to being mortgage free.

I’m I out of touch in terms of what age is now feasible to pay mortgage off early? With house prices as they are and people having to either upgrade or move to bigger properties for much needed space, don’t many people pay off their mortgages in their 40s even after moving from their starter home and with no inheritance to help them pay off the mortgage?

The answer to this question is always that it depends on your priorities.

In your case, you say you're choosing between overpaying the mortgage and more holidays now. If that's the case, it depends on whether you'd prefer to be able to have more holidays in total but have to wait for them, or you want to be able to do more things now and don't mind paying a bit more for that in the longer term. There's no right answer, only the one you're happiest with.

My mortgage runs until I’m 68. I absolutely do not want the responsibility of making the monthly commitments well into my 60s. Realistically if it’s still going I’d be more likely to use a pension lump sum to try and clear it. So much can vary health wise etc.

We’re not spending too much effort trying to overpay at the moment though as feel like money in a pension is a better way to do it and chances are there may be some inheritance. The age that feels most risky though is 50s before pensions can be accessed and when people seem to experience a decline in health.

I really don't see why anyone would actively choose not to pay off their mortgage as quick as they can.

Because in some circumstances you can make more money by not paying it off than you can save by paying it off.

In my case the money was there to pay it off if I needed to. I never needed to.

See an IFA to sort out Inheritance tax now. If you put a plan in place then that should offset the amount due when you've died, and your child won't have a huge liability. I know A LOT of people who do this. It's very common.

Yes, it doesn't sound like that option is on OPs radar but sometimes it's not a choice between mortgage or spend, it's about mortgage or other type of investment instead.

Baffled by this post

You can't see any pros at all for being rid of what's probably the single biggest monthly bill, savings thousands in interest? I appreciate other factors are at play but...You can't see any benefit?! And you've never thought what happens if you can't pay the bills?

Also, who cares what age people normally do this.

Re Inheritance tax, if you're thinking about it now, you have plenty of time to plan to minimise it.

I’m I out of touch in terms of what age is now feasible to pay mortgage off early?

Too many variables. It depends on when the mortgage is taken out. How much it was for. How long it was for. The ratio of monthly payments to salary and other commitments etc.

Life is tricky. Our kids are 14, 17, 17, 18. One's at uni. 4 years until the last will be an adult.

Remaining parents are in their mid 80s. We are in our early 50s.

3 years left on (5 x) mortgages.

I'm hoping there will be a few golden years when we can do more short haul travel, when the kids are young adults and pre-retirement.

Life throws things at you though so don't wait. Remember to do lots of shorter stuff.

I agree that people being mortgaged into your 60s is going to become much more common.

We’re in our late 20s we bought our first house on a 25 year mortgage but for our second with the rising interest rates and the rising cost of living factor applied by the lenders we had to get a 40 year term to be able to make the jump to house we can hopefully stay in forever. We plan to hugely reduce the term as our incomes should go up substantially but if it runs for the full 40 years we’ll be 67ish.

When I’ve chatted about this with friends who have also bought recently it turns out that nobody our age was buying on a 25 year term anymore they’re pretty much all 30 or 35 years. I think 40 year mortgages are still fairly uncommon though.

It's worth pointing out that if one of you gets ill and the other still lives in the house then it is not included in any financial assessment for care costs.
So, it's only if the surviving partner needs care that the house can be taken into account.

Theres a lit to be said for living now cos none of us are promised a tomorrow, but planning for the future is important.

Put your house into a trust fund from a will perspective ie no inheritance tax!

Pay a little more each month to bring the term of the mortgage down meaning your mortgage free earlier. Or use that money to buy a second home, then you could have a second income which means living better today but don't do this if it will overstretch you.

Downsize as much as you want when you want. My view on homes and their size gas changed over the years - we all only need the doace we need. The more dpace we have, the more crap we buy to fill it and the more expensive it is to run. I hanker for an acre of land and a tiny home....!

I'm not following.

Lets say your mortgage is £500 and has 15 years left to run. If you way it off in 10 years, it will cost you more than £500 a month until then, but for the following 5 years you won't be paying anything. So in years 10 to 15 you will have more disposable income than if you hadn't paid it off.

Not only that but the assumption in the thread that everyone - or almost everyone - becomes infirm as soon as they hit their 50s. It's bizarre

You can give it as a gift to your children whilst your alive, with some sort of provisio that you have the lifetime right to live in it. Obviously contact a solicitor for the proper info, but a rich friend of my grandmother did just that. It's a way to avoid that inheritance tax

What you referring to isn't early, it's normal. Early is a few people I know who have either higher tax payers, or worked very hard early on, sacrificed holidays etc, to pay off early, paying less interest, or parents passed and inheritance. Most normal people have balance, have holidays throughout life, but pay it off in 50's -60's. This is us, ours will be paid off in a few years.

This.

Most of us will have taken out our mortgages in the last 20 years when interest rates were very low; so if you have 100k left on a 1.75% mortgage, it's probably better to invest a spare chunk of money wisely, rather than pay off the mortgage: 3% earned is better than 1.75% saved.
Furthermore there is a difference between paying £50K now and £50K in 20 year's time. In 20 year's time the value of that figure will have been eroded by inflation, so you're essentially paying a smaller sum.

Paying off the mortgage can be, but is certainly not always, the best financial move.

You need proper financial advice. If your mortgage interest rate is low your money could be better invested elsewhere. Ie 2% mortgage vs 5% savings. However mortgage rates have risen so this may now not be true.

OP I think you are missing the point that once your outgoings are less, mortgage paid
off, you can look to retire. How will you continue to pay a mortgage when using your pension. Or have you such a good pension that you can afford not to have paid off. Stop thinking about the house only being taken in inheritance tax, there are ways around this, with advice, or you can sell the house yourself and use the money.

Agree with this.
I dont really understand your thinking Op.
Are you saying 50s/60s is early?
Do you intend working into your 70s?
If not how will you find the money to pay your mortgage in retirement?