To think I’m not crazy for not paying this off?

[Juppc]

I’ve been given 70k which is around a third of my mortgage debt. If I paid it down on the mortgage my repayments would immediately reduce by 200 a month and obviously I would have a much smaller mortgage so be paying less interest.

however, I am a single parent, late thirties, to one child and have no plans to ever meet anyone again. This 70k represents 2.5 years of security to me for all expenses. I am currently highly paid but no idea when that could change. If I spent the 70k I would have only 8k left in savings and I am only currently able to save 400 a month. I’d never have 70k again.

I think I am being sensible? Am I?!

Who is paying an 8% interest rate on savings??

when is your mortgage rate up? - for example you pay the 10% off the mortgage this helps MASSIVELY on saving interest. Invest and save the rest (ISA for 20K, High interest 'rainy day fund' £5k etc maybe even a little pension top up as you will be able to take 25% at 57) and then in 2,3 or 5 years (whatever your mortgage is) you have made money on your money, you have saved money on your mortgage and you might have a better idea of your future and can use more of your invested money to pay off your mortgage.

The thing is you'd also be paying less interest on the future debt of the mortgage too if you see what I mean. Even if you just paid off a chunk that would help future you.

I would definitely investigate switching to an offset mortgage. That way you can have the best of both worlds.

£40k into mortgage, £20k into limited access cash ISA, £3k instant access savings, £2k fun, leaving £5k for stocks and shares JISA for your child.

I agree with you. When you're single, a year or more in salary in the bank is a great safety net. In an emergency - lost job, health crisis - you'd have the option of downsizing, moving etc and the cash to get through the change.

I'd keep at least 18 months salary in savings - enough to lose a job, retrain, get a new one.

Mortgage offset savings sounds perfect, but apart from that I wouldn't prioritise the mortgage. You're locked into that for a long time anyway, and the mortgage is the debt you don't rush to clear - inflation tends to lower it over time. You can change your mind on this if interest rates go up to an uncomfortable level, but for now, I see exactly what you mean about having an extra safety net. Much harder to get that security when you need it most from capital tied up in a house.

Sorry just place marking as my book marking isn't working & I want to read the thread later.

I would pay £50K off the mortgage, penalty free obviously. Then invest the £20K at the highest rate you can get, or into Premium Bonds if you fancy a gamble. Whatever you can save on paying the mortgage, put into the savings account. That way you have some savings and have also reduced a chunk of the mortgage.

Very sensible

Illness - long term sickness - redundancy

All good reasons to have a mattress, amongst hundreds of others

It doesn’t have to be all or nothing. Decide how much you want to put in a high interest saving account, how much into your mortgage and how much to make available for spending on emergencies like a replacement car. I’d probably put half into the mortgage.

Put 50k on the mortgage.

Put 20k in a high interest savings account - or premium bonds.

Whatever the monthly mortgage saving - do a standing order to savings.

Yes you’ll lose out on a few £ of interest but to me it’d be worth it for the satisfaction of seeing my mortgage balance reduce by £50k.

Great minds!! 🧠 😁

But that amount of cash will constantly depreciate. Having a smaller manageable mortgage is a no brainer imo. An extra £200 a month is also a good sum and if you want put it into savings for a rainy day.

This, although consider putting the rest in a pension rather than high interest account

Your not being sensible, that 70 paid on a mortgage will save you thousands and I mean thousands of £ in interest. That's 1000 extra income every 5 months and a saving of thousands of £ overall. For me I wouldn't even reduce my mortgage payments I'd pay the mortgage and reduce the years I was paying. To save an absolute fortune in interest and have financial security quicker

Ask around for recs for a decent IFA and see what they suggest.

You need to work out how much you'd save per month if you paid off £50k vs £70 off the mortgage. How will it effect your monthly incomings and outgoings? Work that out before deciding anything.

~The money that you keep back will probably get spent on other things, let's be honest!

It's nice to have a nest egg, but in the end, your house is your nest egg. It's your home. The relief to have finally paid off your mortgage completely cannot be underestimated. That would be my goal.

Can you do an offset mortgage ? Assuming you're not tied in. I have that and it works very well to reduce interest payments

Look at savings accounts that offer a good interest rate for a lump sum.

You can get instant access savings accounts that have just over 5% interest which would give you around £230 a month in interest which you could put towards your mortgage.

Don't forget that you only live once and life is VERY short...

I'd put £20k in an ISA
Pay £30k off the mortgage
Keep £20k to cover emergencies.

firstly a mortgage is no use if you need money for a new car and you have almost 0 balance on mortgage as you paid it off but no savings, work out how much you need to live per month bare bones then multiple by the number of months you feel comfortable with depending on job security how much paid sick leave you would get if seriously ill and needed months off if you work in publiic sector with 6 months full pay and 6 months half pay you need much less in emergency fund than someone you only gets statutory sick pay whatever if you are in the latter category a minimum of 12 months living expenses. plus emergency fund of say £5000 for new boiler, maybe saving towards buying your next car for cash.
check your pension it might be better to invest in that instead.

But I would not reduce monthly mortgage payments. I would keep paying the same amount, and this will reduce the interest and the term.

💯

I would pay 10% off mortgage this year. Then 10% again next year if you feel comfortable after that year thinking.
Keep monthly payments the same and you have shaved years off mortgage term so it will be gone quicker. Then those save years you are earning still but mortgage free

Pay off a big chunk but leave yourself with small five figure sum. Having easy access money gives you more options in life.