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?

Her gift of £50k is conditional on you using your own £50k in a way which she sees fit, which is the issue.

Just on the mortgage vs other investments front, I totally agree.

If we had the money to pay off the mortgage now I'd rather pay some off to keep our repayments the same but reduce the time left to pay, and use the rest for something else (savings, amazing holidays, home renovations etc). If we put the whole thing on the mortgage, we (my husband) would fritter away the monthly amount saved and we'd have nothing to show for it.

I also wouldn't want to be controlled. But what stops you accepting the 50K and paying that off the mortgage but not the rest? Or paying it all off then remortgaging in 6 months/when the rates drop? Would your husband be up for that?

It’s not an all or nothing thing. You could pay a chunk off your mortgage or overpay every month (mortgage terms allow) to bring your interest payments down over the life of the mortgage.

m or if you’re due to remortgage look into an offset mortgage.

If you’re worried about frittering it away monthly money you could be saving why not put £10k into your mortgage and then save the equivalent your payment goes down for a year to sanity check you can stick to it and not spend it. Then reassess in a year.

Does your MIL also want you to use your and DH 50k to pay off the mortgage so its 100k total.

Given that you best know your MIL I wouldn't accept the gift which sounds like she's also dictating how you spend your 50k with those strings attached.

If she wants to give you 50k towards your mortgage that's fine, she should just do so but no way has she a right to tell you it's on condition you leave yourself with no savings or security if unexpected repairs/needs crop up.

Pay off the mortgage. If you’re worried about frittering the money away, I’d say open a savings account with a withdrawal notice period. Even a month would be fine. It means that you can’t just decide to go out for random meals all the time and waste the money but if the washing machine goes, you can put the cost on a credit card and pay it off next month.

So it’s a trade off with the behaviour, you haven’t outlined exactly why his parents are an issue so it’s hard to judge. I’m from a Culture where it’s very much respect to elders, Chinese to be exact. Whilst I have read some genuine horror stories of parental interference on here some is very minor.

I see no problem with the stipulation of its for the mortgage what could be a problem is the behaviours to come. Something like insisting they always go on holiday with you type of stuff. When my Father left money to me it was to be used for my children’s education only for University and that is exactly what is happening it has sat untouched in an account in my name gaining interest.

Thank you again for all the advice. I'd never heard of an offset mortgage so will look into that.

I can see now it is 2 separate issues - financial and emotional. In the past, we have always been hard-nosed - better to get the money for our family than worry about hurt feelings or wounded pride. I would like to say I'd stand on my dignity and turn the offer down but we probably won't- money is money, feelings are just feelings. It hurts my soul but my family is more secure, my DH still has a relationship with his mother, there are positives.

And I am aware of potentially sounding spoilt and ridiculous, I can only say I hope you're never in a similar situation. The upset and arguments my DH and I have had as a result of their "kindness and generosity" - I'll never know if it was worth it.

It makes me feel powerless, helpless and worthless but hey, the mortgage is paid off!

If you want to still have some money in the bank you could put the money into a seperate account, and use it to make your mortgage payments with the maximum over payment each year to minimise the interest paid.

Then because you’re not having to pay the mortgage from your salary each month you can save that amount too.

Completely agree. I'd walk away from the money. It's not a gift.

I'd not be discussing finance of any description with PIL or anyone who might keep them informed. Do you have as much insight into their finances?

I wouldn’t use all my savings to pay off my mortgage. The day after you do that, the roof will fall in, you’ll need a new boiler, your car will blow up and you’ll be fucked.

That’s how my life works anyway so it’s a firm no from me! If you decide to do it, put your mtg payments into a locked savings account so you can get that back up ASAP

I would encourage you to speak to a Chartered firm with no affiliation to St James Place, and sincerely hope your perception is changed, for your own benefit, and that of my industry.

There are a number of advantages that pensions provide that people may not necessarily be aware of, income tax relief relief on contributions, employer contributions, a virtually tax free growth environment, and (pre-budget!) an efficient way to pass money to your beneficiaries. So a good adviser will talk about pensions, and I'd encourage you to listen.

But, a good adviser will also look holistically, and use pensions as tool in their kit bag should it be appropriate.

@Everanewbie why no affiliation to St James Place, out of interest? I'm looking for a FA so I'm curious.

Why don’t you do 25000 on your mortgage and ask if you MIL would match that instead?

You’d be utterly crazy to turn away a £50k gift that will leave you mortgage free.

If you understand compound interest you’d understand that’s more like a £70k gift. £100k mortage over 10 years will cost you about £20k in interest.

Pay off the mortgage and start resaving the nest egg. You’ll be approx £70k better off for it long term.

Subject what happens in budget there's a half way house on this- you could delay the mortgage payment and each pay £50 k to your pensions that would give you 20% back after you submit your tax return or 40% if you are higher rate payers. You could then invest the £20k or £40 k tax rebate into your mortgage reducing it while the pension also accumulates over the years. I transferred a pension just over a year ago which has already gone up 11% - imagine what your pension would look like after say 30 years with a £100k boost now.

This is a good idea.

Also, I read your username as TomSelleckHasKidneys 😁

You'd be utterly crazy to accept a £50k gift that comes with the stipulation that you sink all of your savings into your mortgage along with it.

What happens if they do that and one of them loses their job, or they need expensive house or car repairs?

You shouldn't feel spoilt and ridiculous. Your opinion and agency is just as important as your DH.

Like I suggested earlier, talk to MIL. Explain how grateful you are for the proposed gift, and also explain how you intend to retain your savings to cover unexpected expenses. Her response is a window into her soul. If she is truly benevolent, she will respect this even if she disagrees. If she withholds the gift unless her conditions are met, well, I'd tell her thanks but no thanks.

You are your own woman, and no one owns you.

I would happily take the 50k to pay off mortgage but not if she insists you use your own £50k too- you may well want to keep that for other stuff life throws at you. It's your to your H to communicate that- if it comes with strings then no I wouldn't take it

Apologies if I missed it, but I didn't catch OPs age. Pensions cannot be accessed until age 55, so the money cannot be accessed should an unexpected expenditure requirement arise if OP is below that age. I am certainly an advocate of pension contributions, but only once an adequate emergency fund is in place.

yeah, I kind of thought this might be the issue. Don't do it OP.

I wouldn't accept this 'gift'. No way. Do they expect to move in at some point?

Thank you, you're very kind.

I've also just realised that being mortgage free would make us richer in the long term, I wanted to use our nest egg for a special holiday with kids, like a safari or something.

With the nest egg in the mortgage, that won't be happening.

Pay off the mortgage and invest what would have been the repayment. Why give a lender a load of interest when you can accrue some of your own.

Going mortgage free is one of life's great pleasures.

Presumably you would have to pay tax on the £50k your are gifted.