Pay off mortgage or keep balance?

[Lucywilloe]

We've been overpaying our mortgage for a while as well as sticking in any bonuses etc when we could. We currently have around 7.5k remaining and 8 years for the mortgage to run. As a result of the extra we've put in, we currently have 65k sitting in the mortgage reserve fund which we could withdraw if anything unexpected happened. We have around 20k in savings but I'm feeling a bit anxious about paying the mortgage off in full as we then wouldn't have the reserve. But it also feels a bit daft to be paying interest on the balance longer than we need to. I had cancer a few years ago which makes me more focused on expecting the unexpected and I'm struggling to balance the security of being able to access the overpayment reserve with the potential to be debt free and able to divert what we were spending into savings. What would you do? Feel very lucky to be in this position at all but still fretting over making the right choice.

Personally I would pay it off, however, If you’re worried I would go back to paying your standard monthly rate and throw the extra into savings until you have an amount your comfortable with and then pay off the mortgage.

I would clear it and then build back up again. In theory in the next 12 months I can get close to clearing mine with then no savings. I will clear it if I can though.

I work on the basis that if something went wrong I would still have to find money somehow it wouldn't matter if it is to pay the mortgage or a new boiler. I do get sick pay and a notice period though.

I would absolutely pay it off. That’s a lot of savings. We paid our mortgage off with some inheritance and although it left us with hardly any savings at the time the peace of mind knowing we never had to worry about owning our home was worth it.

Well done. I'd definitely pay it off. We were in the same position 3 years ago and we paid it off, the feeling is amazing and we quickly built our savings back up with what used to be our mortgage payment.

You have two good choices now. Which option makes you happier and less stressed? Do you have to decide now?

If you pay your mortgage off now, how long will it take to build up acceptable/comfortable savings?

I suppose you have the offset mortgage, so you pay relatively small interest, and vast majority of your repayments goes into equity. Which means every month you postpone paying it off completely leaves you with more savings once done.

In similar situation we felt that there was little to gain from going all mortgage, but we would close it if we had to do something about it anyway

We owe about £100 on our mortgage with a generous overpayment reserve but not much in savings.

We won't be paying it off early as it would still be the cheapest way to finance a new car, gifting money to the DC etc.

I’m not a financial advisor but I see your logic in keeping it open to have access to the 65k…

without knowing the actual figures (or what other debt you have - if any), I think I wouldn’t overpay the mortgage, pay the standard/minimum repayment then put any “overpayment” into savings for a while until you’ve built up a reserve. Then switch back to overpaying the mortgage to get rid.

Usually the mortgage has a higher interest rate than any savings account so reducing the outstanding amount to the minimum is worth it.

We paying something like £3.62 for our mortgage each month.

Wow! I like that idea. I don't know why but I thought I should leave a balance of a few £k but just paying a couple of pounds a month would be great. Give us scope to build up the savings but keep access that that 'just in case' pot. Fab comments so thanks to everyone who replied! Really helped as I've been going round in circles.