Use savings to pay off mortgage?

[Menopants]

Mortgage is 18k and my fixed rate is up in march. I will have some saving left over and can start building them again using the 400 I normally pay into the mortgage

You'll get loads of people telling you why they would, and why they wouldn't.
Personally I would if it was me, but do whatever you feel is best for you.

It depends upon whether you can switch to a cheap product and whether the monthly interest you can achieve on your savings is more than the cost of your mortgage.

So you need to crunch the figures.

I'd absolutely pay it off. There'll be hardly any interest gain from investing the money as your new mortgage interest rate is likely to be far higher than whatever you came off. So for peace of mind I'd just get gone.

We just did. As you said you can rebuild with the money you save.

In a similar situation last year I instead switched to an offset mortgage. It effectively works as if you had paid off the mortgage, but if disaster strikes (eg you get made redundant and are out of work for a few months) you can draw out as much as you need instantly.

Can you earn more interest on the savings than you pay on the mortgage? If not, I'd pay it off. Will you have any savings left over?

In my head, it's a simple calculation of whether the amount of interest you would gain on the savings is greater than the amount of interest you will pay on the remaining mortgage capital.

If it is, then don't pay the mortgage off, if it isn't, then pay the mortgage.

I would be surprised if you are generating more of a return on the savings than you are paying in interest on the mortgage.

Thank you everyone. You are all right I will double check the sums but it probably makes sense

We've opted to save/invest ours as our mortgage rate is 2% so we think we can probably do better than that x

I would pay most of it off but keep a very small amount on it to keep the option open in the future of a low interest loan, in case of emergency repairs etc.

Op when you say you will have some left over after paying, how much is that?

We paid ours off & have been saving the difference since June.

We did have more in savings than our mortgage though, so were able to make sure we had additional money for house improvements etc if needed.

We paid off our mortgage early at the beginning of last year.

The feeling is amazing.

It's worth it for that alone!

I was advised by financial advisor to keep small mortgage due to credit checks.
A friend confirmed that she paid hers off and struggled.
Something else to consider when deciding and maybe see if it's still the same now

We paid ours off, now applying for a new one 3 years later on a larger property. It has not adversely affected our credit.

We paid off, with the rise in interest rates we wouldn't be earning as much on savings as the mortgage cost. It's a lovely thing to not have a mortgage

Struggled how, surely if you’ve good credit that maintains?

That’s what we are doing we have 22k left on mortgage and plan to pay it all off end of Jan with savings to finally get rid of it once and for all!

We did that and it was honestly the best thing we ever did. The security of no mortgage is amazing, and your savings will soon build back up again.

I am torn, my head is saying be sensible and check the rates but from personal experience my heart is saying the relief once it’s paid off is worth a few £ difference.

Agree with do the workings. Our mortgage SVR is 8.25% in 2yrs time, we aim to pay the mortgage pff as soon as the fix ends. However currently are getting 4.90% in savings which is way more than our fixed rate so paying it off now would be foolish for us.

@Menopants Depending on your lender, you may actually find it difficult to get a mortgage for an amount under 20k, and be forced to stay on their standard variable rate rather than getting a new deal. Something else worth checking.

We are paying ours off in March (woohoo) - our current interest rate is really low but we'd have to go on to quite a high rate, far higher than we'd get in interest on our savings. Plus we'd have to pay an arrangement fee.

About 4k

Get an offset mortgage, you are just charged interest on the difference between your mortgage and your savings but you can withdraw the savings at any time if you need them. So the best of both worlds.