To not pay off my mortgage?

[TwoTimesShoeShop]

In a few months time, I'll be in a position where I have enough savings to pay off my mortgage.

However, the interest rate on my mortgage isn't too bad (3.5%) and I could earn a little more in interest by leaving the money in ISAs. There's no early repayment charge.

But is there a big psychological gain in having no mortgage, versus just having a mortgage and the equivalent in savings?

Head tells me to leave the mortgage alone. AIBU and will I feel better to pay it off?

I know I'm lucky to have this dilemma and appreciate not everyone is in the same circumstance etc.

Put the money into a savings account earning higher interest. See it as ringfenced for paying off the mortgage when it is in your financial interest to do so. You are therefore effectively mortgage free because you could be mortgage free at any time you like assuming your savings are easy access.

If I'd paid off my mortgage I'd probably up my spending a little (not by as much as the mortgage, but still by some). So psychologically I think I'd be better off with the mortgage still.

I think I'd ring fence it in savings and let it accrue interest knowing that I could pay it off if I wanted to. Id want a good 'emergency buffer' before I wiped out my savings. 6 months pay ideally. It's a lovely problem to have and although there are probably some clear cut answers money is also emotional for many of us and you can't discount that

I have a similar dilemma. Until recently I was over paying the mortgage by £400pm. We’re on a fixed deal at 1.54% until 2026. But my ISA rate is 4.6% so it makes more sense to send any extra money to that. By psychologically, I really wanted to be lowering the mortgage as much as possible. That really doesn’t make sense though!!

This is really true actually! I'd feel differently having no mortgage than having mortgage plus that amount in savings, I think. I guess I can almost start seeing it as a fixed amount of savings?

The time to do it would be when the interest rate on your savings accounts falls below the interest rate on your mortgage.

If you can beat your mortgage rate with savings, and trust yourself not to blow it, it's an easy decision to not overpay.

We could pay off our mortgage but are earning more in savings. It is nice being mortgage free (have done it twice before) but not at the expense of your savings.

We could pay off our mortgage but we are choosing not to. We have kids about to go university and who may need a help with a deposit. It will be way cheaper for us to use our savings than to remortgage to help them. At this stage in our life, there are many reasons why we want liquid wealth. If/when the kids get settled in steady jobs, we will think about paying it off.