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Original poster

Are there any down sides to paying off a mortgage?

62 replies

Canyoucheckonme · 26/09/2023 19:02

Just that really. We've saved enough to do it now so seriously considering it.

But are there any negatives? (we're mid forties, two children).

OP posts:
PoachedDregs · 26/09/2023 19:04

What is your interest rate? We could pay ours off but we're choosing not to as our money is working much harder for us elsewhere.

PotteringAlonggotkickedoutandhadtoreregister · 26/09/2023 19:04

Will it take all of your savings? I wouldn’t put all of my savings onto it, just in case.

gogomoto · 26/09/2023 19:06

We did, it's a great feeling. Interest rates are higher for borrowing than saving!

Darkbountyismissing · 26/09/2023 19:07

What is the cost of extending your mortgage vs taking out a new mortgage if in the future you wanted to borrow more? Say for home improvements

NouveauNom · 26/09/2023 19:07

Rationally, it's the opportunity cost - e.g. if you could be earning 5%, it doesn't make sense to use that amount to pay off a debt with 2% interest.

Emotionally though, nothing will beat the freedom you'll feel once you're mortgage free. (Or so I'm told - I still have 8 years to go!)

Original poster
Canyoucheckonme · 26/09/2023 19:54

It's been DHs dream as he's had a mortgage since his early 20s.

No, wouldn't wipe out all our savings (he's far too cautious for that), we'd still have plenty left for home improvements.

Our fixed rate of 1.09% is going to end and we'd be put on a variable one of 7.4%, so an ideal time for us to just pay it off. Yes, savings are earning more. We'd put the £600 per month we'd normally be paying the mortgage into savings.

I think the emotional freedom, not panicking every time the news headlines talk about scary interest rates, will be massive for DH.

OP posts:
Frenchfancy · 26/09/2023 20:04

If you are disciplined enough to put at least some of the saved cost in mortgage payments into savings then or is a great thing to be mortgage free.

PosiePerkinPootleFlump · 26/09/2023 20:06

When interest rates are low money may be better invested elsewhere. But if you are due to move to a higher rate it's a no brainier - pay it off. Use the savings for pension or other investments like ISAs

Original poster
Canyoucheckonme · 26/09/2023 20:08

Great. Thank you all! Definitely sounds like a no brainer. Feel very lucky and privileged right now.

OP posts:
UniversalTruth · 26/09/2023 20:09

I’m not saying don’t do it, but you would renegotiate rather than accept 7.4% so that’s not a true comparison.

DyslexicPoster · 26/09/2023 20:10

Following as I have unexpectedly inherited enough to wipe my mortgage. My comes off fix in 24 so I'm presuming it will be higher rate than my savings

OnAFrolicOfMyOwn · 26/09/2023 20:11

The only other thing I can think of is that the money won't be immediately available if you need it for something else.

Bumblebee2022 · 26/09/2023 20:26

We paid our mortgage off at the start of the year and honestly, it’s the best feeling and I’m so glad we paid it off rather than keep the money in savings. We’ve already started to build the savings back up with what we would have paid off each month, but the relief of never having to worry about paying for housing is immense and I feel very lucky and privileged to be in this position.

ActDottie · 26/09/2023 20:27

gogomoto · 26/09/2023 19:06

We did, it's a great feeling. Interest rates are higher for borrowing than saving!

Not if you’re still locked into an old mortgage rate. We still have2.56% for four more years. So makes sense to save as saving rates are higher.

Original poster
Canyoucheckonme · 26/09/2023 20:32

OnAFrolicOfMyOwn · 26/09/2023 20:11

The only other thing I can think of is that the money won't be immediately available if you need it for something else.

I'm wondering if it would affect our credit score, too? We have no other debts, no credit cards for over 15 years etc.

OP posts:
honeyandfizz · 26/09/2023 20:33

ActDottie · 26/09/2023 20:27

Not if you’re still locked into an old mortgage rate. We still have2.56% for four more years. So makes sense to save as saving rates are higher.

Show quote history

Yes me too. Interest rate of 2.35% on the mortgage for 4 more years. I am putting the extra that I would overpay the mortgage into an ISA which is paying 5% a year.

Original poster
Canyoucheckonme · 26/09/2023 20:33

Bumblebee2022 · 26/09/2023 20:26

We paid our mortgage off at the start of the year and honestly, it’s the best feeling and I’m so glad we paid it off rather than keep the money in savings. We’ve already started to build the savings back up with what we would have paid off each month, but the relief of never having to worry about paying for housing is immense and I feel very lucky and privileged to be in this position.

Great to hear! Well done :-)

OP posts:
Mojodojocasahaus · 26/09/2023 20:36

Do it op! You don’t want to be paying 6% if you don’t need to.

Re “credit score” there isn’t an actual thing but finance companies like to see that you can use credit responsibility but you can do this by having a phone contact or buying something on a credit card and paying it off

Congratulations!

GreyBlackBay · 26/09/2023 20:42

We have had enough to pay off the mortgage for probably 10 years. Chose not to because we could make more with the money ejsewhere, even in safe investments.

It would be hard to earn more than our mortgage rate safely now so considering paying it off.

There's a lot to be said for having money available. We have an offset mortgage, so can offset all of it without actually losing access to our cash. They're rare these days but might be worth looking into.

Original poster
Canyoucheckonme · 26/09/2023 20:46

It's been DH's lifelong dream to be mortgage-free at 45 so we're going to do it!

Eek re credit. I have a mobile phone contract but his is a work phone. Honestly, he hates credit in all forms so avoids it totally. I worry that one day we'll want to borrow some money for something big but nobody will lend us any... But then guess we can get a bank loan against the house? (you can tell I'm clueless with these things).

OP posts:
strawberry2017 · 26/09/2023 21:03

I'm all honesty I'm baffled why someone wouldn't pay off their mortgage if they could. It's such a large monthly expense I'd do it in a heart beat if I could!

HoraceTheLlama · 26/09/2023 21:11

We paid ours off a couple of years ago, and are very disciplined about saving what we were paying in to various schemes and savings plans. We feel very fortunate to be able to ride out this current interest rate COL situation comfortably.

you could always get a credit card and use it for the weekly shop and pay it off in full each month to build up a credit score if you are worried

WashingBasketFull · 26/09/2023 21:16

Just get a credit card and use it for any big purchases, holidays etc (so security if your holiday company goes bust etc) and set up the direct debit to pay it off in full each month. Credit cards aren’t anything to be scared of and come with benefits. Win-win.

PyongyangKipperbang · 26/09/2023 21:18

I paid mine off earlier this year and I have to say that the freedom of not having to worry every time the rates go up is lovely.

whenindoubtgotothelibrary · 26/09/2023 21:18

I think the potential downsides are not having liquid cash if you need it, losing interest if you could put it somewhere where it earned more than the mortgage rate, and if you're older there's a risk that you might not be able to borrow larger amounts again if you needed to. But I can really understand the psychological pull of being mortgage-free. DH is keen to do the same once our rock bottom Covid era 5 year rate expires.

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