Paying off mortgage

[KyaClark]

If you had the money, would you pay off your mortgage or would you do something else with it?

Definitely pay off the mortgage.

We paid off the mortgage. It was just before Christmas last year and we came into a lump sum and given the way that interest rates were looking to go - we were on a tracker - combined with the inflation risk we decided to rid ourselves of the mortgage. Turns out that it was probably the right thing to do as rates have gone up and will likely continue to rise, inflation is making cash worthless and our investments have bombed so whatever else we'd have done with the money would have us both being a bit worried now.

There's also a lot to be said for having security in owning all of your house. There's a big sense of relief that whatever happens job/health wise etc we don't have to worry about affording the mortgage anymore. The peace of mind that has given is completely worth it to me.

Thank you both so much for replying.

We are on a fixed rate until 2024 but we are planning to pay it off before then.

We are selling an asset (well, my husband is) and it's worth quite a lot. I just wanted to make sure that it's the most sensible option because some people are against it (or so I've read..).

Paid it off in 2020 and it’s fab!

I paid mine off. Then I got made redundant. Not having a mortgage made that redundancy so much better.

Reduce your outgoings, then you can use your income to invest.

Mathematically, investing while you have a mortgage makes sense. However it has risk. If you were to take out a £500k mortgage to put all that money in the stock market - would you do it? How about £1million? At what point does your risk meter go off... it will trigger at some point.
Borrowing to invest is a bad idea, anything could happen to disrupt your plan - global pandemic!

If I had a fixed rate I would probably invest it - during inflation, get as much debt (for investment) on as low a rate as possible.

Our fixed mortgage is 1.14%. We could pay most of it off but have put the money in savings at 2.74% until the fixed rate period ends.

I paid mine off. Then I got made redundant. Not having a mortgage made that redundancy so much better.

Same. Knowing that your home is safe gives you real peace of mind.

I am exceptionally fiscally cautious and hate debt. So I would pay it off then save what would have been the mortgage payments and put those into shares or other investments.

We had a windfall in our early 30s and paid ours off, with the intention of saving the mortgage payments (or at least some of it!). Didn’t happen and if felt like we were wasting the golden opportunity. So we ended up remortgaging our own house to buy a smaller rental property outright. It was better financially to do it that way than get a mortgage on the rental property. The rent largely covers the mortgage so now it still doesn't really feel like we have a mortgage, but we also have a sound investment for the future.

Going against the flow, I could pay off my (interest only) mortgage and don't.

I'm on a 5 year fixed rate of 0.99% and typically make around 20-30% annually on my ISA investments. Financially, it makes much more sense not to pay it off.

For my last two remortgages, the lender has wanted proof that I have the full mortgage amount in liquid assets. Which is fine now but would have been a non starter for my first two properties.

To add to answer a previous question, I'm comfortable with risk (partly as I work in financial services). Most of my investments have fallen in value over the last six months so you have to be willing to ride out the stock market cycles.

oh I was just going to ask how you get 20-30% .... mine have lost value this year ... sob

Worse still, I now write about it for a living... so have to relive the pain every day at the moment!

My global funds are down 30%, mainly due to the US tech stock sell off. Although some made gains of 70% one year so I'm still in profit.

There's a few glimmers. So far, the FTSE has held up better than the Nasdaq as it has more defensive stocks. I've switched some investments into commodities which are volatile but (randomly) a coffee ETF has done well in the last few months. I've also bought a double short on the FTSE ETF which hedges falling markets a bit.

If I'm being honest, I think markets will fall further before they recover. I keep trying to remember that, according to IG, the FTSE 100 has returned 8% on average since 1985, even taking into account the dot com bubble and global financial crisis stock market crashes.

Thank you.

We've got a bit invested but I don't really know what I'm doing.

The plan is -
Mortgage
Private pension (my husband is self employed)
Investments

We invested 22k for our DC - 12 in 2919 and 10 end 2020. DH had grown it to 30 before all the shit hit the fan - I don’t ever ask him where it’s at now because I know I will be devastated (20k of it my parents gifted them when they were born).

But they are both under 4 so am hoping it will recover by time it’s needed (hoping it will pay for uni for at least 1 of them leaving us only 1 to fund ourselves)

Id pay off mortgage - we’ve just taken on a large 25 year one but luckily have a fix of 1.29 for 5 years so hoping to pay off a big chunk when we come to re-mortgage

we could have stayed in our old house and been mortgage free - would quite have liked the security of that but we felt we wanted more space

The other thing worth saying is that, once it's gone into your mortgage, it's gone. I guess you could extend your mortgage later but I don't know how easy that is without moving. It doesn't give you flexibility.

It might be worth paying for financial advice if you don't feel confident in managing your own investments, or, if not, the big investment platforms have model portfolios that aren't a bad option.

I'd advise to try and shelter it in an ISA that makes it free from income or capital gains tax. If you both put £40k into a stocks and shares ISA, you can just leave it in cash and not invest it until markets recover. Or do that before the current tax year ends. You'd only get a modest interest rate but it's better than nothing.

I would love to be mortgage free. We plan to start overpaying once I'm back from maternity leave and then increase that when the nursery fees drop. If I had no savings I'd probably put something away for a rainy day and pay the rest off. We currently have a reasonable level saved though so would definitely clear the mortgage.

@gracedentssketty . unless he picked bad investments it will definitely recover!

There was an interesting if not even sad thread a while ago about the old child trust funds. The gov gave families 200 or so to invest or put into a normal account. The poster who put it in a normal account, pretty much only had the 200 or less or slightly more after all these years.

This who had invested it into shares and left it had considerably more.

It's cyclical,it will rise and fall.

@RockandRollsuicide thank you for the words of comfort!

that is such a sad story

Absolutely pay it off. We're actually paying ours off tomorrow (!!) and I'm so excited. It'll be quite a decent chunk of money that doesn't need to be spent every month now, meaning we can finally save, and stop counting pennies.

Linda investors would have argued that if you invested that money 💰, you would have had enough to pay off the mortgage and money left

We paid ours off. However we also 'future proofed' our home against increased energy costs (this was 10-12 years ago) , so new boiler, solar, solar top up for hot water (meaning all summer zero oil used to heat hot water), better quality double glazing, top quality new thick curtains, extra layers of insulation (well above then current guidelines), rewired with LED lighting, etc etc.

It's paying dividends now.

Might be worth looking at how you can reduce your energy outgoings. Not only do we pay zero mortgage, but our energy bills are about 2/3-3/4 less than they were.
So our savings have been immense!