To not want to pay off my mortgage?

[IProbablyAm2024]

My DH and I are very fortunate to potentially have a nest egg of about £50K. MIL has also offered to pay off the remaining £50K if we put it in our mortgage so we are "debt-free".

I am struggling with this for a few reasons:

• mortgage is manageable and not a problem (although has increased)
• our house is old so don't really want to "invest" in it - we might move
• money is then trapped in the mortgage and unavailable
• I think a lump sum/nest egg would be more use for large purchases and rainy day problems
• it reassures me to know this nest egg is available for emergency medical or other expenses
• I feel exposed knowing it's all in the mortgage
• we'll be better off each month but only by the amount of the mortgage payment
• what if we fritter it away each month?
• I feel bad having my MIL pay off my mortgage- a failure as an adult and a parent (backstory alert)

Husband is on board with the plan and is excited to save £30k of mortgage interest over the life of the mortgage. I think you don't save what you might never pay.

Should we do it?

You're going to have to explain the backstory a bit more if you want anyone to understand why you are turning down a £50k gift

A financial advisor would not advise you to pay off your mortgage. But for many people it is an emotional thing.

After FIL died my MIL gave us 10k as an inheritance that she wanted us to put towards the mortgage. Financially it didn't make the most sense, but it made her feel better to know that's where it went so we did it.

Because none of your other reasons really bear scrutiny at all. Obvs the thing to do is to save the mortgage you are not spending into a savings account (make it hard to access if you don't trust yourself)

You can't ask her to give you the money but not spend it on the mortgage, that is too cheeky

I'd definitely pay off the mortgage. Then I would set up some kind of account where I transfer what the monthly mortgage payments were into a savings account.

To be able to save £30k in interest is massive

I'd pay off the mortgage, but that's mostly emotional I think. I dont know what would be better financially. Fully owning the house would make me feel more secure and I'd put what's saved on the monthly mortgage payments directly in savings anyway to build them back up.

If your mortgage repayment isn't a lot though then maybe that makes a difference to how good an idea it is?

Wouldn’t they? The sensible thing would be to pay off the mortgage and redirect the payments into your pension to benefit from the accompanying tax relief. Or do that with half of it and rebuild your savings pot with the other half. The psychological effect of owning your house outright can’t be overstated.

We paid off our mortgage for emotional reasons. You are right it didn’t make financial sense but it felt good - I hate debt.

We haven’t frittered - increased pensions and savings.

Moving house doesn’t feel like a reason to me - are you worrying about being able to afford improvements on a new home? Surely you can just take out a new mortgage when you move . What am I missing?

It sounds like your MiL is offering another £50k on top of £50k you already have. Why on earth would you turn that down?

How much is your mortgage a month? I'd set up a new account you can't easily have access to and funnel the would-be mortgage payment into that so it isn't frittered.

I was mortgage free at 30 as my parents gave me a 0% loan and it gives a massive amount of financial security and takes a lot of stress off if something happens like redundancy or illness. You and DH could always offer to pay MiL back so you don't feel like it's a random gift and still save on the mortgage interest.

I think you don't save what you might never pay.

If you move house, surely, you'd need another mortgage unless downsizing. So you will very much pay 30k due to having less equity.
Up to you, really. I'd take paid off mortgage any day. I paid mine off 4 years ago (10 years ahead of schedule) and have since saved up which, together with my equity from a sale of my flat next year, is likely to buy me a bigger property either mortgage-free or with under 50k mortgage.

I'd pay it off and direct the money elsewhere. It partly depends if you have other debts, savings etc though.

It always comes with strings. And the strings often put me and my DH at odds. PILs are very selfish, self-centred and "help" us in ways that often don't help at all and make things worse. MIL giving us the money gives her more entitlement to our time and energy.

I can't really be specific as it could be outing but it's bad enough that a bit of me would rather go without. In the past, we have taken the money and the consequences and its never been painless.

It doesn’t matter what you want. Your mil wants to give you the money to pay off the mortgage so that’s where it goes. When you accept gifts from others you need to accept their terms too.

We could pay ours off, but have the money invested at a much higher return than the interest rate on our mortgage so it would be madness to pay it off

If you pay off your mortgage, you can still move, you'll just have more equity in your house to put towards the new house.
I paid off my mortgage in my mid 30's (small mortgage) but then set up a standing order for the mortgage amount to be paid into a savings account. I didn't notice the difference on a month to month basis but it built up into a large sum which gave me security.
This gives freedom for the future.

How you can say it’s not really helping has me baffled

It is a help and it’s very generous- they are offering to clear your mortgage fgs

it is your thinking that is off not theirs!!

We paid our mortgage off a couple of years back … gives a lovely sense of freedom and security. For example, lots of shenanigans at work at the moment, possible restructures and redundancies .. and I am as calm as you like, as I don’t need to worry about paying the mortgage.

Op doesn’t want the gift.
If I’ve read this right.
Op has her own £50k that she wants to use for other things.
The mil wants to match the £50k and insist the £100k comes off the mortgage.
Mil has no say over the nest egg, that’s for op and her dh to decide.

Is it £100k outstanding and she will only give her £50k if you use your £50k too? So effectively having to use your savings as directed by her?

You are potentially turning down 80K (50k from MIL, 30k saved interest).

Only you know if the back story is worth that.

I would - and ignore any rubbish "strings"

I would also set up a direct payment to a savings account of the amount you would be paying

You’ve never had someone controlling your life with money.
Op has obviously got previous experience of these generous acts.

If it is this then it would be a No from me. As great as being mortgage free is (we are) you might need some cash for an emergency and it will take a while to build up a nice amount of savings.

This is the reason that makes sense to me.

Worrying about frittered away income that would have gone to mortgage could equally apply to frittering away the lump sum and you miss out on the further £50k.

But if the level of interference is unbearable then that's a NO. But it seems DH allows this anyway so if he does why not be £50k better off and save mortgage interest.

Perhaps set up a standing order to a savings plan that only allows a couple of withdrawals a year? Or even explore offset mortgages where the savings offset the mortgage savings you interest. With the total amount offset you pay no interest and the monthly payments pay off capital

Don't be blackmailed. Do whatever you want with the initial £50k and tell your MIL thanks but no thanks.