Paying off the mortgage.....

[Peterbear]

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.

It's also (I'd say more so) 'liberating' to have enough funds in the bank to pay for essential repairs, bills for x amount of time etc. being mortgage free, isn't the be all & end all, especially if you can't pay the bills & haven't any savings.

No I’d not do this, that would be mad, pay it off if you can afford it sure, but don’t be selling off your car and living on beans, just reduce it.

Pay a chunk off

Always good to have a buffer or savings incase the worst happens

Tho how much is your mortgage monthly

Once you have paid it , transfer rhat money into savings for a few months to gain a buffer /savings again

You need £1000 that is instantly available, then pay off any credit cards and debts, followed by a 3-6 month expenses fund, then pay off mortgage. You do it as quickly as possible, selling, giving up and going without, believe me it is liberating. The saying is ‘live like no one else so you can live like no one else. We turned it into a game and really enjoyed the process.

can I ask how you’ve managed that?

@ChocolateHelps do you mind me asking what sort of pension you are thinking of when you say pay more in and get 25%? We overpay our mortgage and don't add anything to pensions beyond the standard amount, we are both on local government scheme defined benefit pensions. We thought for us overpaying mortgage was best, but are we missing some trick with pensions? Thank you

On the thread question, bearing in mind I'm not sure I am best to answer, it seems illogical to me to completely wipe out savings and make life hard. I would pay as much overpayment as I can each year though

Being mortgage free is fantastic BUT I wouldn't do it in the situation you describe.
By all means pay some of it off (you can often pay 10% a year penalty free but check your exact mortgage details) but id also keep 3-6 months in a cash savings account and leave enough to truly live on. Beans for a year isn't a great move.

It sounds like you could easily be mortgage free in a few years tho. Why not target that?

@Willowtre1 DH and I both pay into a personal pension (happen to be arranged through Vanguard, but many others exist). We automatically get tax relief added - so the government topup every payment we put in.

A small example: highlights at hairdresser were £80 every 6 weeks, contact lenses were £ 20 a month that is nearly £1000 a year. I stopped colouring my hair and bought a cheap pair of specs. My DH trimmed my hair for me.
We sold as much as possible and every penny went on paying debt and mortgage. We went down to one car, always took coffee and sandwiches with us wherever we went, found free concerts and lectures, art galleries, museums, stayed in Premier Inns for mini breaks and took pasta pots and porridge with us, use rail card and 2 for one deals, cooked from scratch, never bought branded goods, used charity shops, libraries for books and dvds ( still do all of these things!) I started knitting all our socks and leant to darn them, made clothes, took in mending and ironing, knitted socks for friends in exchange for things. Those are some of the things we did.

Paying into a SIPP. You get the tax relief back...so if you pay in £1000 the government tops up by £250. I have a SIPP with vanguard but no other pension

@Kentishbornknitter

im glad it works for you & that you enjoyed it.

However, £1000 is the arbitrary amount you decided you were happy with. It wouldn't give me the contingency I have/would want.

Nor would only 3-6 months expenses fund. That might be enough if you're retired & collect pensions, but as a single, working person I would not poke everything over that into paying the mortgage off. It doesn't give security & stability.

im not worried about while I'm working needing to pay the mortgage, I'm more happy to have instant funds/a greater length of time with bills covered in case I find myself unemployed.

it also depends on what redundancy/illness cover you have, mine isn't great, I wish I'd taken out more when I was younger/healthier.

im glad it's worked out for you, but simply being 'mortgage free' at all cost isn't necessarily the most liberating or desirable plan for everyone.

We paid ours off last year. Ours was already small (low five figures) due to overpayment and our inheritance was larger than the remaining mortgage.
we had a mortgage with no early repayment penalties and also had enough left for a emergency fund.
Personally, I would need to fund the emergency fund (6mths of living costs) then I’d only pay off if there was no ERFs.