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 paid my mortgage off 2 years ago (almost 7 years early).

I'm thanking my lucky stars now that I did, after 18 months of every price increase we've all lived through, high inflation, and now the interest rate rises.

I only paid a small amount on top of my contracted monthly mortgage payments, so didn't really miss out by much over the years, but I've certainly felt the benefit over the last couple of years, and I'm still only mid-50s, so have (hopefully) plenty of years ahead to enjoy not having a mortgage to pay.

As someone already said..it's freedom. Freedom to cut down on work when u want to. You get to keep so much more.of your salary. You know if disaster struck u still have a roof over your head. I had an inheritance that paid the rest of our mortgage off a few years back. I honestly am grateful every.single.day.

We had our first mortgage in 1989 and always overpaid. We always paid off extra when possible. We both had redundancy payments which enabled us to pay the mortgage off in 2001, I’m not going to lie it felt wonderful. We moved again but used savings to make up the difference. All this was done with me unable to work since 2005 due to having M.S. my husband has worked his arse off for our family, we’ve had some magical holidays all over the world, and wonderful memories. Our 27 year old daughter thanks us for these memories and how amazing they were. Snorkelling in the Red Sea, safari in Kenya, being our bridesmaid in Vegas 🤣

I certainly wouldn’t want a mortgage in retirement but if you have a good pension scheme and it’s affordable then I don’t suppose it’s an issue. It will mean paying more interest to the mortgage lender at the end of the day.

We've paid off our mortgage and it means we have more disposable income at a time we really need it.

It depends how risk averse you are really. It’s hard to predict what the future holds.

I didn’t expect to be divorced and single in my late 50s, and as a public sector worker with in effect, pay cuts for the past 13 years, with very little disposable income after bills - which means I pretty much just exist, without many of the ‘nice to haves’ my peers take for granted.

I’m just soooooo relieved the mortgage was paid off when we were in our late 40s (through a combination of overpaying, and some redundancy money), as I have the security of a roof over my head at least.

Paid off ours in our 50s . Lovely feeling, removes stress. Improves lifestyle.

If it's paid off in your 50s, won't you continue to work? think of all the additional disposable income you will have

Do you have kids? You can help them? University or save to help them get on the property ladder

I understand lots of comments on living for today, but you don't know what going to happen tomorrow. Already people are suffering because of the spike in mortgage rates, and I bet many on here don't remember when mortgage interest rates were in double figures. I'd certainly look to pay it down as with the state of the current economy and inflation, I wouldn't be surprised by further interest rate hikes.

Have you got a gov.uk link to explain this, please? My property and other assets are worth slightly more than £325,000, so wouldn't IHT be liable on anything over the threshold, even though I am leaving everything to my two DC?

It depends how early you want to pay it off really, 50/60 isn’t what I’d class at early - if it was 40’s then yes go for it!
But just to add perspective my mum and dad probably could of paid off more towards their mortgage as dad was a good earner, however they used the money towards holidays, trips and days out etc - me and my sister wanted for nothing and we have such a close relationship and happy memories. The mortgage was paid off by the time they turned 60ish. Since then dad has been diagnosed with Parkinson’s so we don’t know how many good years he has left and he is so grateful he used his younger years wisely to make memories.

Agree completely with this, there needs to be a balance. To me think about tomorrow and your future self will thank you

@Snippit

Having MS is exactly why I pulled out the stops to get my mortgage paid off as soon as I could, I didn't know when I bought the house how long I'd be able to work for, then when I was pensioned off on health grounds in 2011, it made me even more determined to put as much as I could from my benefits into paying down the mortgage.
Now I'm struggling more with the physical side of the condition and am looking to downsize to a bungalow, which is actually possible because the house is fully mine and I won't need another mortgage (not that I could get one in benefits anyway).

I think it’s a good question. But I’m mortgage free ( not from working to pay it off ) and I can’t imagine having that expense at this point of retirement and living on mainly state pension. Also you don’t have the worry of up and down interest rates. When you’re older you have an increased need to know what your outgoings are as far as possible. Plus nice to know you have a steady asset. But I can see that there is a life style balance in the decision. You do pay a load of interest on your mortgage.

@Harmonypus could you not have downsized even with a mortgage still to be paid? The equity would have paid off the balance with some left to live on plus your pension.

@Tunaormayo74 Surely this all depends on the actual figures?
You've not given any details.

It depends on your income v proportion of it that goes on the mortgage.
And what your income will be in later life if you want to spin out the payments.

By the time we were late 50s, and the mortgage was paid off (with some overpaying for a long time) it was around £750 a month. That was a relatively small percentage of our income then compared to when we bought the house in our early 40s.

Now it's paid off, we are still saving that amount of money (as retirees with good pensions) and gifting sums to the DCs to avoid IHT.

If we didn't have a good pension and were struggling to find £750 a month on less money, in our late 60s, that would be different.

You don't sound as if you have done any long term planning but are taking the 'live for today and leave a debt for the child to sort out' attitude.

Is that fair or am I being harsh?

@BooneyBeautiful That is right. Had a meeting with out IHF recently and he confirmed that- property up to £1M is currently outside IHT-if it'sleft to children and includes one spouse's share - but this can always change depending on the government of the day. You can find the gov uk info yourself- don't be lazy asking someone to do it for you!

Thank you for your response. Spouse not involved, so just me. I had tried to find this information on gov.uk, but could only see the part regarding the £325,000 threshold. I wouldn't dream of asking someone to post a link if I could find it myself, so there is absolutely no need to be so rude and call me lazy!

@BooneyBeautiful

Gov.uk says this - If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000.

I thought it was £325,000 too.

Thank you so much for your response. I have searched everywhere on gov.uk for this information and still can't find it! Is there any chance you can share the link, please?

If you Google UK IHT thresholds, this is the very first link that comes up.

www.gov.uk/inheritance-tax/passing-on-home

Doesn’t that only happen if both need care?

This. I think it’s far more common to have paid your mortgage off by mid-50ish.

Remember that most lenders won’t lend to you post retirement age anyway, so you absolutely should have it repaid by then.

This depends. Some people are overpaying as much as they can right now because when their rate ends they are going to be paying an extra £££££ per month due to predictions that rates will never be as low as they have been in the past

so you need to think about that

It seems to me that people who don’t want to pay off their mortgage now (if they’re able) are putting more store on peace of mind in the future rather than in the now. Being mortgage free will enable more peace of mind now AND in the future so it makes no sense to me not to do it.

I think the huge rise in interest rates over the last year changes the dynamics of that question quite dramatically. The amount of money to service that debt over a term makes those - live in the moment holidays - far more costly if the alternative is to pay down the mortgage. How that lines up though, is up to you.