Should we pay off the mortgage?

[Sweetmoons]

We have 60k mortgage and paying nearly £300 on interest per month. We have some funds in a stock and share ISA which is not earning anything. Is it worth it to take off that money to pay the mortgage? And free up the £300

I would

I would, then take one month and enjoy the £300 then straight into a savings account going forward.

It depends on the interest rate. If you can invest and earn more then no, if you can't then yes.

Bear in mind that ISAs are extremely valuable tax wrappers, and once you take the money out you don't get your previous allowance back - you can still only put in £20k per person per year. Depending on your tax rate, a pound in an ISA could be worth much more to you than a pound outside an ISA. If that ok then by all means pay off the mortgage. Personally I plan to never take money out of my ISA until retirement, and then draw a tax free income out of it. We have a mortgage and are happy to pay the interest on that and still keep money in our ISAs, because the tax benefits are so significant.

You say your S&S ISA isn’t going up. What’s it invested in? Markets around the world are very strong at the moment so if it hasn’t gone up in the last year that’s a problem. I would look at what you’re invested in and whether that can be improved before taking the money out.

There is the psychological aspect too. I felt like a weight had been lifted when I paid off my mortgage - just knowing that no-one can take my house and we have a safe roof over our heads is a thing I am thankful for every day and I know that is not the case for so many people sadly.

Are you paying interest only? 300 seems high in interest for 60k. I would clear mortgage if you have the opportunity.

I would!

what do you mean not earning anything? are the funds not invested?

Are you really paying 300 in interest or is that your mortgage payment total each month.

How can people can say yes to pay it off with our having the complete picture is beyond me. Irresponsible at best to give advice on that basis

Not enough information given.

Are you in a deal that has exit penalties?

Is the mortgage interest only or repayment? It sounds like you have an IO mortgage at 6%, which is quite high. How long have you had it and what was your original plan to pay it off?

What is the interest rate? It sounds high - do you have other debt/a poor credit history? If so, you'd probably be best paying that off, building an emergency fund, then maybe over paying, but also making sure you're on a decent rate.

How much is in your ISA?

What sort of ISA is it? Why is it 'not earning anything'? Mine has grown about 15% in 18 months and it's just bog standard tracker fund.

Would you be left with an emergency fund/money for planned large purchases like car or home improvements if you did pay it off?

What would you do with the £300 if you didn't have a mortgage? Do you need it for essential bills, would you save it, or would it get spent on fun stuff?

Thank you all.

Our debt is 60k; fixed interest 5.8%. We pay £600 of which around £280 are interest.

Will check reg the stocks and share ISA.

We don’t need the £300 for essentials so will save it

How on earth is your £60k not earning anything? You could be getting at least 5% atm in an ordinary bank account, a s&s ISA should be more.
I wouldn't pay off that mortgage, it's not a huge amount, can you shorten the term?
Make that £60k work a bit harder, don't put it all in your mortgage and leave yourself with no capital.

Exactly this. Make sure you set the 'spare'/'saved' cash aside until your savings are built back up again. You'll be better off in the long term doing this. You could even pay the entire mortgage amount back into savings until they're replaced. You're no worse off month to month, but it will be better in the future when you're mortgage free and with plenty of savings behind you.

5.8% is high. Is the £60k in savings all of your money?

if it isn’t I’d pay off the mortgage. If it is I would consider what would happen if you suddenly had to get a new boiler/car etc. perhaps you need to save more before paying it off in this instance

Yes, as others have posted, it depends on the difference between your mortgage interest rate, and what you could get from either saving or investing. However, you should also have an accessible emergency fund of between 6 and 12 months of costs (depending on your exact situation etc.).

Meaningful Money is very good, and has lots of podcasts available.

@Sweetmoons This calculator allows you to try different configurations from a one off overpayment to regular over payments. https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

It is always recommended to have at least 3-6 months savings for emergencies.

You may also be limited to overpaying 10% per year. As pp have said 5.8% is a high mortgage rate. I would start by seeing what options you have to renegotiate this.

If your mortgage allows it consider a lump sum of 10% e.g. £6k but also carry on paying £600 a month. Note: You might need to do a lower lump sum to keep within the 10% figure. If you put the figures in the calculator you can see the impact long term of the monthly overpayments.