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?

I get that it's about the strings. Sometimes they aren't worth the money for the way they affect your life and independence, ime.
Plus it might not be financially sensible at the moment - is your interest rate lower than your savings rate?

We have a similar situation. An inheritance that would pay off our mortgage but like you, our mortgage is manageable so we have decided against paying it off. We would never be able to save this kind of money up again.
We might pay 1/3 of the mortgage off when it's due for renewal in 12 months and aim to reduce the term but we like having some savings available.

Rubbish.

A gift with strings attached is not a gift at all, it's a way to exert control over someone.

I’m with you, OP. A relatively small mortgage and a decent amount of liquid cash would always be preferable to me. I don’t personally get the obsession with paying off a mortgage, but each to their own.

I would probably invest some in my mortgage, hopefully they would still match it, say 30k to the mortgage and 20k savings.

Well no, because they'd be trying to sell you investments. So not really a great measure of whether it's the "right" thing to do.

THIS is an extremely valid reason for not paying off the mortgage.

(The rest of the reasons are rubbish and make no sense).

I think they would if it came with a free £50k

Just wanted to say thank you to everyone so far- I really appreciate the comments. I have been burned before but I don't want to be stupid!

(If it was up to me, I would be very low or no contact but that is not what my DH wants, and I love him, if not her.)

Hhhmm. If the MIL wanted to make a £50,000 gift, specifically to pay off some mortgage debt, then this is a kind and generous offer that on the face of it, most people would snap your hand off for. But the issue here is that the gift is being offered with the proviso that you match her contribution.

My worry here is that the gift isn't really a gift, its a hook to maintain control of your finances and limit your ability to make your own financial decisions, which as an adult with capacity, is your absolute right.

If it were me, I would spell out to her, that you are extremely grateful and such a gift would have a huge beneficial impact, but you would be in a more robust and nimble financial position by retaining £50,000 as an emergency fund while using her generous gift to reduce the mortgage debt to the point where interest is minimal, allowing the principle to be repaid a lot faster. Her responses, I think, will offer a window into her true motivations.

It comes down to what degree you are willing to hurt yourself financially to maintain your independence and agency. Everyone has a different red line on this, but there is a point where you say "thanks, but no thanks" and go your own way safe and secure in the knowledge that every penny you have is off your own sweat.

So your husband wants to pay it off, and your mil has offered a signficant gift to help you both, and you would rather keep the debt?

Why? Is there a simple explanation, please?

I can't reconcile paying the interest unnecessarily. But I'm from a family that didn't handle money well so I don't have good instincts.

That's a very good way of putting it - that's pretty much what I meant!!!

Op I would just take the money and pay the mortgage off..there is no better feeling and the money you pay on your mortgage now you can set a standing payment to another account to save it so you don't waste it.

When my MIL found out I was pregnant with her first grandchild, she wanted to buy us a house outright to own and live in. We were paying 925pm for rent and she doesn't want any money back. She bought DH a £350k house. We now direct a payment of 500pm straight to another account for savings and we live a more comfy life with the other 425 and this works for us. We are eternally grateful and she was happy to do this for us otherwise why would she offer

Your MIL wouldn't offer something that's going to f her over so I'm unsure why you'd need to feel guilty..the gift of being mortgage free is amazing.

Is it, so your husband doesn’t want to pay the mortgage off?

How would she even know whether you paid YOUR money off of YOUR mortgage? Does she get to see paperwork?😮

Sounds to me like your MIL should wind her neck right in, and your OH should acquire a backbone. I say this as a parent who has given each of my children £50K - with no strings attached

Why on earth would you not pay off your mortgage.

You are getting another 50k on top and saving 30k in interest so are a net 80k up and will be mortgage free.

Madness chucking away 80k you must be very well off or stupid.

Hi. I am a Chartered Financial Adviser.

Yes, on the face of it, making £100,000 from £50,000 sounds, at first glance, too good an offer to pass up. But our job is not simply to maximise someone's wealth. It is to identify objectives, where someone wants to be, what makes them tick, what does a happy life look like. If an upfront £50,000 comes with strings that hurt their objectives, and comes with major drawbacks, it is not necessarily the right thing to do.

If you're looking at it from an outright best way to maximise the investment of the £50k, then you'd leave the mortgage in place and get the £50k into pensions asap, especially if you're a higher/additional rate tax payer as you gain so much in relief.

40% tax = 67% immediate return
45% tax = 82% immediate return
62% tax = 163% immediate return

(62% being the effective tax on earnings just over £100k)

A good advisor would certainly be taking such things into account, dependent on age.

Edit obviously the additional £50k available from MIL complicates it somewhat.

How about an offset mortgage? You can put your £100k total into an offset and achieve both goals - mortgage "paid off" and still have access to your money if needed.

This is what I would do.

In fact, this is what we did (no one gave us £50k though).

We might move, but it means we would only be taking a mortgage out for the difference between our current house and where we move (minus any savings we are building).

Yes but clearly the op is being vague on this..

Well no because that money can be made to work harder in investments rather than giving the bank the pleasure of doing so. I agree about the emotional thing.

Because you can almost always match or even beat the interest cost with savings and/or investments.

Only reason to pay off a mortgage is if you'd otherwise fritter the money on non essentials.

If you can manage not to do that, there's likely no financial benefit and you could always use the savings to cover the cost if you can't afford essential bills eg if you lose an income.

But if its the only way to get the £50k from MIL, I could suck it up. I'm also very good at ignoring emotional blackmail and interfering in laws when it suits me.

There's a post from a chartered IFA making the point better than I could.

These are better reasons than anything you've stated in your OP. If you'd said THIS in the OP, might be getting different responses.

The reasons in the OP are a bit flimsy.