Should we pay off our mortgage or invest the cash

[Sonnet]

Dh and I are 50. We owe 28k on our home. We have the cash to pay it off. Should we given talks about recession , Brexit etc.

We want (not need) to do some work on the house and paying off the mortgage would put paid to that for the time being.

I think I know the answer but am interested in other points of view. DH and I are risk averse! ,

Personally I would pay off the mortgage. Then look at funding works on house via a loan

Are you likely to get a loan at a rate lower than your mortgage? If not, and the 28k covers the work you want to do, I’d use it for that.

Though if it were me I’d pay off the mortgage, not do the works and just enjoy having a load more disposable income each month, for a while at least!

I'd pay off the mortgage because the psychological impact of that would be huge.

Are you likely to get a loan at a rate lower than your mortgage? If not, and the 28k covers the work you want to do, I’d use it for that.

^ This is my thinking. How essential is the work you want to do? What difference will it make to your quality of life? Or will your QoL be more improved by having the psychological (and financial) burden of having a mortgage lifted?

It might be worth having a look at how much you'd save on interest by paying the mortgage off/paying a chunk off so that you had a smaller remaining balance.

It depends on so many factors: interest rates being the key one, but also earning potential, pension, children going to uni, retirement plans...

If it were my mortgage, I'd not pay it off because the interest rate is ridiculously low and investing the money, or renovating the house would be a much better option.

If you are both in full time work for different companies and not at risk of redundancy I would get the work done and invest elsewhere for now until you again have enough to pay off remaining. You will likely get a lump sum at retirement which can pay down the small mortgage but may not then be wanting the house in upheaval having work done

You're unlikely to get a loan for a lower interest rate than your mortgage unless you have a shitty mortgage rate so use the £28k to finance the work.

You might even get savings at a better rate than your mortgage (we do), so for now make sure you have a decent amount of savings before rushing to pay off the mortgage.

I would pay off the mortgage and use the extra money to save for the work on the house.

You never know what's round the corner regarding redundancy or ill health so I go with having minimum debts possible.

Thanks all - interesting to read your reply's and all the very thing we go round and round discussing....
Non of the work is essential - more updating a tired house - decorating, new flooring in some rooms and a new lounge suite.
We would still have some savings, money for a rainy day and investments.

To put the £29k into perspective it is less than 5% of the price our house was recently valued at.

2 Dc - one just finishing uni and one likely to go Sept 2019. So yes that will need funding.

Our jobs are pretty secure as far as we know but anything could happen economy wise in the next few years.

No way could we get a loan less than our mortgage rate and equally all the best saving account rates mean tying our money up for 3 years at least. I then worry we may need access to it to pay mortgage in the event of ill health or redundancy....

I think I'm leaning to paying it off and then saving to fund new house decor!

Thanks all - it's helped get it into perspective reading it back on here

Yes we would get lump sums at retirement but that's not for 15 years yet - mortgage would be long gone by then (2 years to go if we don't pay it off )

It's a lovely feeling, paying off your mortgage. Then every month you have that spare money, which would soon pay for room decorating, replacing flooring etc., but, in the unlikely event something should happen to one of your jobs, you will completely own your own home, even if it does look like it needs a bit of a makeover.
I'd pay off.
Or you could pay off all but £1000 or £2000 and use that to spruce up and have a miniscule mortgage if you prefer.

Best feeling ever was when we paid off our gigantic mortgage

You could pay off the vast majority and just keep a small amount hanging on, so you’d have access to that line of credit later on if needed.

Regardless of interest rates - the interest you’ll pay on a 28k mortgage would be more than on for example a 5k loan. I’d pay off the mortgage - always pay off debt before saving

SpacePenguin - Does not make sense.
The interest savers are getting on their money is ridiculous, so its not worth saving when in fact the interest rate on the mortgage is more than the rate on the savings.
The same money being saved is what banks are loaning to home owners and making twice/three times as much as they are paying in interest to you the saver

I wouldn't pay off the mortgage and I am a similar age to you. Money is cheap to borrow at present but it is much harder to get a mortgage when you are older. It's also a small sum in the scheme of things.

But then I would probably spend a chunk on a fabulous holiday - as someone said, you never know what's round the corner!

SpacePenguin - Does not make sense.
The interest savers are getting on their money is ridiculous, so its not worth saving when in fact the interest rate on the mortgage is more than the rate on the savings.
The same money being saved is what banks are loaning to home owners and making twice/three times as much as they are paying in interest to you the saver

Since you don't know the details of my mortgage, you have absolutely no basis for that assumption. The interest rate on my mortgage is less than what I can earn on my savings. Obviously, that's not true for everyone, which is why I said it depends on the interest rates involved.

We paid off our mortgage in this exact scenario a few weeks ago. We will save for the work on the house. now that we are not paying thousands on the mortgage every month it won't take long but in the meantime we have that security of knowing that the house is completely ours.

I would pay my mortgage off in a breath. You can do the bits in your house every few months or so (depending on expense) by saving what you'd pay for the mortgage.

I would balance how long I was planning to work for, against interest rates, against what the work was and how much it would improve my life.

We paid off our mortgage this year, but we're a long way off retirement, and that extra breathing room of not having a grand going out each month (we'd got a fixed rate before the rates dived :( ) means that we're not worried about losing jobs, and anything we need to save to do now seems much more achievable.

Knowing that the roof over your head is yours, and all you have to cover is food and bills is very freeing.

The interest savers are getting on their money is ridiculous, so its not worth saving when in fact the interest rate on the mortgage is more than the rate on the savings

Sometimes, but far from universal. The interest rate on my mortgage is 0.8%. The interest on my savings is between 1.5 and 5%. I would be a fool to pay off my mortgage, which is under £400 pm, so hardly a burden anyway.

BarbaraofSevillle :

Maybe you should yourself how many people are in the same situation as you, with a mortgage at 0.8%, that is the question?
Obviously the object of the whole question went right over your head.