Mortgage free house - Remortgage to invest?

[LondonBuyer]

Hi all

Due to various circumstances we have found ourselves in a position where we own a good value home, completely mortgage free.

As a couple in our late 30's we are seriously considering now re-mortgaging and investing the proceeds in various shares and funds with a view of aiming to retire early.

I am quite aware of the pros and cons and the risks and considerations and frankly change my mind daily on what is the right thing to do for the family. I can not get away from the reality that a 5 year fix will cost us 1.4% per annum - this is a low hurdle to beat and the repayments are servicable from normal salary so the investment can be left to sit and "accrue" on its own for the next 25 years.

Has anyone else been in this position? Did you go ahead? How do you rationalise your choice?

An Indecisive Mum.

I wouldn't remortgage my sole asset to invest, tbh, especially in this economy. See a professional financial planner. How early is 'early retirement'? I think the idea of being economically inactive for decades of your life expectancy is very unrealistic unless you are already quite wealthy. Far better would be to re-train for more flexible working.

I'm mortgage free. I invest more than my old mortgage payment each month. Drip feeding an investment works for me. I would not remortgage my property to put a lump sum in an investment. Mathematically it may work out but you get a lot of security from having a paid for home.

We are mortgage free (inheritance used to buy a house). We could have gone for a much larger home with a mortgage but decided that actually this house is perfect for us as a family and having more land to look after and more bathrooms to clean wasn't for us.

I love the freedom of being mortgage free. DH has a relatively secure job but who knows what will happen with the economy following on from covid and Brexit? I wouldnt risk remortgaging in the current climate - could you instead save/invest what you were paying for your mortgage every month to build up an early retirement fund? Being mortgage free meant that I could quit my job when things became miserable at work (NHS trust in special measures) without worrying about finances. We have an excellent standard of living, we have enough left over to build up savings for the dc, we still pay into pensions - all the sensible stuff but not having to find £2000 a month for the mortgage payments certainly helps with that.

If you've gone to the trouble of clearing a mortgage, you'd be foolish to re-mortgage and risk your financial security. Investments can and do go down in value and some never recover.

Also one of the key points for investing is to drip feed so as to smooth out bumps in the market. This fits much better with regular contributions, rather than lump sum investment.

Another one saying drip feed into investments and to the extent possible do so via a pension. I didn't follow this advice and it went wrong.

We have been mortgage free for many years and never once contemplated this.

We have managed to save decent amounts from our salaries (despite having 2DC in our 30s, with nursery and after school childcare costs for well over a decade) into ISAs, private pensions and, for DH, some individual shares. We have above average incomes but nothing spectacular, I have worked PT since having DC.

I have a number of company pensions, both final salary and defined contribution, but DH has been self employed for many years so will primarily rely on personal investments.

We are now late 50s and can comfortably retire whenever, however I am finding that the hardest part of early retirement is getting our heads around finishing early (and I have never been a live to work person!).

As pp said, drip feeding is key to investments, which doesn’t tie in with you remortgaging.

Like a pp, we could have bought a bigger house over the years, but preferred the freedom and security that not having a mortgage gave us.

We are just about to receive a lump sum that will enable us to pay off our mortgage. We are thinking of taking an offset mortgage instead and fully offsetting in the first instance, but with the ability to draw on the capital if we want. For example, if we wanted to help our young adult children with a house deposit.

I would definitely sit down with a financial planner who can do some cash flow modelling for you, chatting to you about when you want to retire, how much money you will need etc. it doesn't have to be all or nothing and drip feeding into investments in the current market is advisable. They will also help you to make the investments as tax efficient as possible -for example tax relief on pension contributions, will your employer match any extra pension contributions that you are making & where is that money being investing, growth rates, access etc.