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Original poster

Paying off the mortgage.....

37 replies

Peterbear · 18/03/2023 11:21

Like most people we've been slogging away at our mortgage for years. We now have about 50k left. Dh inherited a few grand recently which got me thinking - should we scrape together 50k and pay off the mortgage (would mean emptying our savings, using inheritance and selling car and generally eating beans for a year).Be interested in people's views/experiences - the thought of being mortgage free would be amazing but worried about cleaning ourselves out iyswim. Thanks.

OP posts:
determinedtomakethiswork · 18/03/2023 11:30

It's not an all or nothing thing! Pay off what can, but don't sell the car for goodness sake!

transformandriseup · 18/03/2023 11:33

If there are early repayment charges then just pay the max allowance per year until it is paid. Definitely don't sell the car.

Bodybags · 18/03/2023 11:34

No I would not.
we could pay ours off but I prefer life.
Rather go on a holiday every other year, days out, decorate with the money. Stuff you can experience, see and do.
My kids won’t remember the year we paid off the mortgage but will remember the week in Devon when we are fish and chips looking out at the sea.

Squiblet · 18/03/2023 11:44

Have a read of the small print. Are there early repayment charges?

If you're able to transfer your mortgage, an offset mortgage can be very useful for people in your position. Your savings work to reduce the interest you pay, but you still have access to the funds. I don't have time to type out a proper explanation, sorry, but have a Google!

Cupcakequeen75 · 18/03/2023 12:53

Seems daft to me.

I am all for paying off the mortgage (did mine donkeys ago) but not to the extent of sacrificing everything (including financial security).
A mortgage is usually the cheapest loan you can get so unless you are saving massively by paying it off (any ERC's, what is your interest rate etc?) I would pay off some and make sure you have a financial cushion. That done, look again in a year or two

pompomdaisy · 18/03/2023 12:56

It's still cheap borrowing. If you have to go that short the answer is no. Just pay off a chunk.

Asdf12345 · 18/03/2023 12:56

I get a better return in savings than the mortgage so am paying off slowly. Not going full out interest only, but accepting that it makes no sense to pay it
off.

Depending on your attitude to risk you may prefer to pay it off, but for us it would make zero sense.

InterestQ · 18/03/2023 12:57

depends what your rate is and until when - if it’s under 2% and your savings are making more just clear it when the term ends. Don’t sell your car though.

Precipice · 18/03/2023 12:57

Not to this extent.

Overpay on the mortgage, but live normally: eat in a normal way that's healthy and enjoyable, keep the car, definitely keep some savings. Money accessible for an emergency requiring a sudden significant costs (e.g. boiler breakdown, leaking ceiling) will do you much more good than that same money off your mortgage.

InterestQ · 18/03/2023 12:57

Being “mortgage neutral” is a good thing too!

Calmdown14 · 18/03/2023 13:48

Are you coming to the end of a fixed rate? Are you expecting a sudden change in life like retirement?

I wouldn't (and I am massively in the pay it off camp normally) if it means going to these extremes.

Could you pay off a chunk and then throw a bit more at it to get in done is say two years.

But what makes most sense depends on the mortgage rate you currently have.

Calmdown14 · 18/03/2023 13:52

@InterestQ I like the phrase mortgage neutral. Not heard that before. Good thing to aim for. I fixed for 10 years (4 years ago) so I need to keep a bit of it going til then. Psychology it will be good to think about the neutral point as I think having savings is still important and currently interest on them is better than the mortgage.

lljkk · 18/03/2023 13:56

You won't find many people who regret paying their mortgage off early, but key thing is not to undermine your quality of life in meantime.

Boomboom22 · 18/03/2023 13:58

If you might ever want money at low rates again its actually worth keeping a small mortgage as remortgage and drawing out more money is cheaper than loans or equity release once paid off. Overpaying is good though and once you have say 6 months savings prob OK to pay off entirely. We have almost 200k left and recently extended the term to 5 years after retirement, but I've calculated a standing order overpayment to bring it back to just over 20yrs.

TomatoSandwiches · 18/03/2023 14:02

We paid ours off last autumn but only because it made sense due to our deal coming to an end so no penalty fee and at the time savings rates were less than what the broker offered us. We still had other savings that didn't limit out way of life.
I personally wouldn't go to the extent you have set out, I would need a buffer in place at least.

FirstnameSuesecondnamePerb · 18/03/2023 14:31

No, don't do that.
You need some liquid assets to deal with the bumps in the road.

Dragonsandcats · 18/03/2023 14:33

Why would you? Assuming your mortgage interest isn’t really high

sixfoot · 18/03/2023 14:38

No I wouldn’t do that. Just over pay what you can without penalty and live normally. Is still cheap borrowing so long as you didn’t fix over 5%

Thatdarncat4 · 18/03/2023 14:40

I’m glad I paid off my mortgage before interest rates increased but I’m also glad I fixed my energy price for 2 years before energy prices increased too. It’s a financial balance quality of life would always win out for me personally but I live quite a simple life anyway. Do what will make you happiest and beans on toast are a treat in this house for me and my husband because we love them it’s the kids that want proper meals everyday and moan about beans on toast. I know they are in for a shock!

Musicsoundsbetter22 · 18/03/2023 14:44

I’d pay a chunk but not at the sacrifice of life. I overpay but I can afford to and save too. Plus live a life. If money got any tighter it would be the first thing to probably go.

Original poster
Peterbear · 18/03/2023 14:45

Thanks for your comments .x car no big deal tbh as we use the bus/train a lot. It's more worrying not having any buffer left. Thanks all

OP posts:
RudsyFarmer · 18/03/2023 14:46

Agree with everyone else. Is there an early repayment policy? Do you have the mortgage fixed currently and if so is it at a decent rate?

Personally with a small mortgage like yours I’d rather put any savings into premium bonds and just overpay.

Kentishbornknitter · 18/03/2023 14:53

I would do it, in-fact that’s more or less what we did! Then we downsized, moved to a different part of the country. We gave ourselves 2 years to pay iff the mortgage. However low an interest rate it is still debt and it is so liberating to be debt free.

ChocolateHelps · 18/03/2023 14:56

Look at meaningful money podcast. You need a few different pots....short term easy access (premu bonds is a good place) for at least 3 months expenses. Then max out your pension contributions as you get 25% added. After that pay off small chunks of mortgage by overpaying monthly. But you need these other pots before paying off the mortgage

WinterMusings · 18/03/2023 15:16

@Peterbear

what interest rate are you on, what type of mortgage & if it's fixed, when does it end? & what's the ERC?

but unless it's a ridiculously high rate of interest, it makes no sense to
pay it off.

accessible money is important, having money you can use to replace the boiler, do roof repairs, without stressing is really valuable & improves your daily life.

without all you figures it's difficult to say exactly what I'd do, but I certainly would be scratching everything together to pay off the mortgage.

it'd be cold comfort to be mortgage free but not be able to pay the bills if you became I'll/were made redundant/had an accident ... and these things DO happen.