How much of this would you keep back for savings?

[Palmollive]

I owe 250k on my mortgage. I have 70k to pay off, with no early repayment charge. Would you pay it all down and begin saving again? Or keep some back? And if so how much?

Are you on a fixed rate mortgage ? When does your rate end ?

How secure is your job?

Are you single ?

I'd probably seek financial advice from an advisor.

Personally- I'd over pay monthly using the £70k unless I was remortgaging and needed it for the LTV to decrease the interest rate.

I'd keep £10k back and pay the rest off. Well done!!

I have always tried to have enough savings such that I could pay mortgage payments for the next 12 months, were I to be out of work. I have been made redundant and not had another job to go to on two separate occasions.

I’d invest it, you’ll get better returns.

No easy right answers here OP, but I would suggest holding some back at the very least to act as an emergency fund.

Other considerations would be around interest rate of the mortgage, mortgage term, affordability of the repayments, whether you value being debt free/lower debt or liquidity, attitude to risk, other savings/investments, future expenditure plans, when you aim to retire.

My personal thought, not advice BTW, If you pay off £70k, how much would that change your life? Phycological? Reduced monthly outgoings or shorter mortgage term? You'd owe £180,000 still. But if you retained the cash, you will owe more, granted, but will £70k to cushion you, which I'd find more comforting than the slightly open ended and somewhat nebulous concept of a mortgage. That's just me though.

@Everanewbie yeah this is what I am grappling with! I do feel secure having it and obviously when it’s gone that’s it isn’t it. Paying that off would reduce the repayments by 250 a month so not much really.

To save £70k by putting aside £250 per month (assuming no interest on savings) would take 23 years.

You would increase the equity in your home though, but if you're not planning on moving any time soon, again, its somewhat of a far out theoretical thing.

Assuming you’ve got a low interest rate locked in, keep the money as an emergency fund! You never know when you’ll need it and once it’s put towards the house it’s gone. Maybe overpay every month

If your mortgage rate is lower than a good savings account, stick the money in there and watch it grow with interest. You can diversify and put it into various pots e.g. stocks and savings ISA, Cash ISA, Pension, Premium Bonds etc.

Get a financial advisor!

Way too little info to give any sensible advice I’m afraid. All the factors mentioned so far, plus what’s your pension looking like, any dependants?, do you solely own the home, what are your prospects moving forwards (ie could you save it again easily), how secure is your job and probably about a thousand other questions which will impact your best move
time for a full financial overhaul with a professional imo

Do you have a higher interest rate on your mortgage or your savings account?

@WonderingAboutBabies I agree with your sentiment. Be warned OP though practically, it is unlikely that many advisers will be looking to take on a client with c.50k of investible assets. A good adviser will undoubtedly recommend holding back a decent emergency fund meaning that the fees paid for the advice are not likely to represent good value. That said, a good adviser may conduct an initial meeting and even pass on some nuggets of 'non-advice' advice, if that makes sense, generic signposting etc. And if you ignore everything I say, at least take this bit of advice, stay away from St James' Place!

Personally, I kept paying my mortgage, overpaid it on a monthly basis rather than in a lump sum, and then paid the balance down when I had enough to pay off the balance. But I did have ERCs and had a low interest rate as well.

What % is your mortgage interest compared to the % you can get on a decent savings account?

Personally I'd put 1/4 of it into instant access savings for an emergency fund. 1/4 into something like premium bonds, they can be accessed in 3-5 working days, and 1/2 into a long term bond.

Check if the interest on your savings after tax or your mortgage interest is higher.

I would also be looking at your pension and contribute the most you can to that.

Otherwise, unless you are in a very secure job, I would hold some back to give you living expenses for 6 months plus anything you will need like a replacement car or boiler.

I’m going to be in a similar position in about 2 years when it’s time to remortgage. I could clear my mortgage but will be left with 10K in savings at age 47 as a single parent. Not sure I want to lose the security of having money for emergencies or job loss.

Saving £250 a month isn’t a lot, unless you really need that £250 (it sounds like you don’t). Are you on your own? Or is there someone else to help financially if you needed it?
I think you’re better off investing it or use it to overpay monthly.

What are your other financial circumstances, how much do you have in savings otherwise and in what form (ISAs etc)? What is your pension situation, do you have a workplace pension or private pension or both and are you already making additional contributions? Any major financial expenses on the horizon, any plans to move? Any other debt (secured or unsecured?). Is your mortgage currently fixed rate, for how long if so and what's the interest rate?

MN in general is really obsessed with paying off the mortgage as early as possible, but in general I treat it as a low priority. Yes mortgage is debt but even in these days of higher interest rates you usually earn more in interest from investing elsewhere that you save by putting it against your mortgage. Mortgages (on your primary residence) are in general a secure and cheap form of borrowing and IMO not comparable to other forms of debt like credit cards and loans. Also by using the money to overpay the mortgage it then becomes illiquid as it's essential increasing the equity in your home, and you'd have to sell or remortgage to access that capital should you need it.

My plan, assuming your mortgage is currently 5% or lower (things would change if more) would be:

-Keep at least 12 months essential living expenses in an accessible account
-Pay off any high interest debt inc car finance if possible
-Make additional pensions contributions through your workplace pension or a private pension, up to the maximum tax deductible threshold.
-Invest the maximum (£20k if you don't already have an ISA opened this tax year) into a stocks and shares ISA in a low-medium performance managed fund, aiming for ~5% performance
-Consider junior ISAs for any children
-Consider a 3 or 5 fixed term bond again aiming for at least 5%

Only after this would I think about paying down the mortgage (and make sure you are reducing the capital amount/term not the monthly payment or it's pointless).

Watching this thread with interest and we are in a very similar position. Our very low rate is up in around a year, and our plan is to pay off around £80k of our £215k mortgage, and keep around 10k in savings. We can then shorten our term quite a lot and keep our monthly payments the same.
We save between £1000 and £1500 a month usually, so should be able to start building up savings again for DC's university.
Interesting that most people would here would do something different. I am taking notes!

@maxelly this is brilliant

There is also a finances planning flow chart that I can never link to, but shows the same sort of advice.

Six months expenses, rainy day savings, pensions, funds for kids at college then mortgage repayments

Good advice.

Was the 70k a windfall if some kind or have you just saved it up gradually but not made any overpayments? Is it all you have in savings? How's your pension and how old are you?

If you do pay off a lump it shouldn't be to reduce your monthly payments, as that way you'll still pay more interest than if you reduce the term.