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?

Agree with this.
I know many people are saying pay off your mortgage but I would prioritise an emergency fund if you don't already have one with the money you already have and decline your MILs offer.

With no mortgage to pay surely you could pretty quickly afford to do this? Unless your mortgage its tiny now.

Well, you would be £80k better off, so there’s that. Only you can decide whether that’s worth putting up with more ties to your in-laws. You can build up another nest egg again, relatively quickly since you won’t have mortgage payments.

Can you take her £50 and just lie to her and say you paid it off. Or pay her £50k off then just dont pay your bit?

Even if it was well intentioned I personally would find it totally infantilising for an adult to do something that was my responsibility. If it was a nest egg for children that's different. Why is she bothered about you putting all your savings in?

How long would it take you to save up the money you are being coerced into using?

Our mortgage and all associated costs (insurances etc) are £1,000 pcm. So if we were disciplined we could save £50,000 in less than 50 months (hoping for some interest!) but if we decided to have a bit more fun it would be longer.

I hate the stings in your behalf but having grown up with housing insecurity I'd accept the strings! I'd find a way to make them into pretty ribbons. 😆

You've mentioned several times that you wouldn't be able to access the nest egg as it would be "in the mortgage", but I got the impression that if you accepted the £50k and combined with yours, you'd be mortgage-free? Would you still have a mortgage left to pay after? If not, then the nest egg isn't "in the mortgage", it's that you own your home outright. If you needed extra money in future, say, for a safari, you could take another small mortgage to cover that. You'd just be saving slightly less of the £30k interest saving. Alternatively, you could put away the £500+ each month that you'd save on mortgage payments, and use that for the holiday...

It's been a fair few years since I worked in FS, but most advisers at that time would go with "only retain debt if it costs less than the earnings on your savings" - so if savings interest rates are higher than debt (mortgage) interest rates, leave the savings, otherwise pay off the debt. Is that not the case any more @Entertainmentcentral

YOu can either be mortgage free or not have the £50k. I cannot see how you would wisely turn down the money! I have given each of my 5 children the same sum for a first property. The gift was only for a property, not for anything else, not for an ISA, not for a sure fire winner bet on the stock market, not to go into savings for a rainy day - I was only prepared to give it to go into their first property. Obviously they all took it. Of course now they have it they can sell the house and spend the money on alcohol etc if they want (none of them has).

Take the money from the very very kind mother in law and reduce the mortgage by the sum she gives to you and hope it is done before later this week Labour might tax gifts! You have a very few days

some cautionary advice: if MiL gives you 50k to help pay off the mortgage, is she likely to keep reminding you that 'she paid off your mortgage' ? Also, is it likely that she may have an increased sense of entitlement over the property, or perhaps even want to move in, in the future ('since she paid for part of it').
If she will only give you the 50k if you also use your 50k, this just isn't normal behaviour/thinking.

@Entertainmentcentral why wouldn’t they advise you do this? Surely, it’s contextual - if your interest rate is higher than the interest you can earn on savings, then you’d be better off. If it’s a marginal decision, then I’m sure many would make an emotional decision.

Yeah that "reason"makes no sense at all - it's not "tied up in the house" it becomes equity. It's not like the money stays with the house for the next person if you sell it, it goes with you so yout next house will also be either mortgage free if the same price or less, or a smaller mortgage.

Seems mad to reject it to me.

Even if you don't take the money from MIL, putting the lump sum in mortgage and continuing to pay monthly what you currently pay will hugely reduce the term of the mortgage.

If you make the pragmatic decision to accept the money, make a personal decision to keep putting away the equivalent of the mortgage payment, or at least a large chunk of it, for a while - you may be surprised how quickly you could build up the lump sum for emergencies and to do the dream holiday etc - and start earning interest for yourselves rather than giving interest payments to the bank.

As your own personal strategy to feel less bound by the strings - see it as MIL releasing you to make your own decisions in the future without her being able to control them as it is your lump sum that has no "need" attached to it.

They attempt to circumnavigate remuneration rules by charging deferred initial fees that are effectively exit fees. They are obstructive to other advisers when seeking information on their products. They are expensive, and investment performance is poor. Definitely worth a google for specifics.

She doesn't have to accept MIL's money. She doesn't want it because it comes with strings attached.

Awww. It's really sweet that you think that.

Most financial advisers are very unlikely to say: Well pay me my £2k fee for advice, and I'll advise you to pay your mortgage off, and you'll feel like you've had really good advice.

Even fewer will say, well you're best off paying your mortgage off, so I'm not going to give you any advice.

Much more likely to say: Well pay me my £2k fee and I'll work out how you can invest in all these great products so that you end up covering your outstanding mortgage, the interest on it, my upfront fee, and my ongoing fees - but remember, investment means your capital is at risk and so it's not guaranteed, so you can't turn round later and say "they should've just advised me to pay off my mortgage".

It is really not true that all independent financial advisers are motivated purely by altruism 😂

@Ozanj that's all fine, but the issue is MIL is making the gift only if OP uses her own money, in addition to the gift, to repay the mortgage in addition to other unspecified conditions.

Does it really matter what the right financial decision is, OP? You don't want MIL to be holding this 'gift' over you for the rest of your life. Having had a MIL like this I do not blame you.

@IProbablyAm2024 Apologies if others have said already as haven’t read whole thread, or if this is totally unsuitable, but could you consider an offset mortgage so the money isn’t “locked” in your property but you still get reduced interest?

personally being mortgage free would be an absolute dream from where I’m standing right now (mortgaged up to my ears!) but personal finance is personal at the end of the day and if you have emotional reasons for not wanting to pay it off then do what’s right for you!

I would do it @IProbablyAm2024 It's the dream for many people to be mortgage-free. We have been for about a decade now, and it's amazing. So much more surplus income, and no worries about interest rates soaring/not being able to afford the rates!

And if you're being given £50K too (if you decide to do it!) then FGS do it!

It is fair to say that it would be more lucrative for an adviser to recommend an investment portfolio than to repay a mortgage.

However, this does not mean that an adviser will recommend an investment instead of paying off debt. The reality is that most advisers do actually have their clients' interests as their driving force. Of course, you must be commercially minded, but this should never mean acting against someone's interest. If someone had a strong desire to be debt free, I would seek to repay debt to meet their objective. I would highlight that they may end up being less wealthy as a result, but if that is their objective, its my job to meet that. I will question, probe and manage any misconceptions that it may be based on, but we work to meet their objectives, not a text book right answer.

Advice is generally reviewed, maybe spot checked by compliance teams (who are extremely robust), and advisers that recommend actions that put the client in a worse place will be found out.

I hadn't notice the point that she will pay 50k if you both use your 50k to pay off too so £100k then comes off it. That sounds a bit controlling to me as a mother who gave money without strings but only to be used to buy a property. However even so it sounds a very good deal - you get £50k for nothing.

Thank you for explaining the above, I understand now and makes sense.

I am into paying the mortgage as soon as possible because I saw in many many families where the work situation changes for one reason or another.
While I am currently healthy and my husband is too, I think you really decrease the level of risk by overpaying your mortgage (if you are in the fortunate position to do so as we are).
If for example you are in a 85K job and suddenly your health deteriorates in a way that you can only work a few hours a week to recover long term, you might only able to make half of the money, or a quarter, let's say 22K. You may wish then to have your house paid. Unless you have a huge amount of savings.
I have a friend in this situation for the past 10 years. Its such a peace of mind to have it paid before anything major happens.

No mortgage means a forever roof over your heads

Even if lost jobs /became ill etx

No worry that can't pay every month

If moved /downsized then easy to take money out as such

Set up a dd to go to a savings account that can't be touched/lose interest if make a withdrawal

I don't know how many times it's been said on this thread already (many) but paying off a mortgage which is incurring interest at a lower rate than your savings/investments are growing is not 'giving a lender a load of interest at the expense of you accruing growth yourself'.

But the money is still there, you can always remortgage anyway

And you can re build a nestegg