Save or pay off mortgage

[Claymoreiron]

We have about £70 grand left on mortgage with 5 years to pay. Between me and DH we could pay that off in one go. Not having the mortgage would be great and I would even be able to start thinking about retiring.. It would clean us out though. No savings left.

WWYD?

I’d just pay it off over five years.

Liquid assets > paid off house, particularly when the sh*t hits the fan.

What's your rate? What's the max you can pay without penalty?

There are calculators online that will tell you which is the better option.

How much will you save in interest if you pay off the mortgage? Check an overpayment calculator.

Also as soon as you’re not paying a mortgage, you can use that money to build up savings again.

You could do a bit of both, doesn’t have to be all or nothing.

That’s true! Could pay half maybe? Will look for a calculator online. Thanks.

What interest rate are you paying on the mortgage?
What interest rate are you getting on the savings?
Are you tied into a mortgage with a repayment penalty?

I think moving to zero savings is not optimal. The interest rates and penalties might guide you as to if it's financially worth it.

We've paid ours off early with combined savings and it's a big weight lifted off our shoulders. Now we'll see the mortgage money go into a savings account instead. It's nice to know the house Is ours.

Only pay the mortgage off if the interest rate is higher than what a savings rate could give you (after tax).

For example if you can invest the money at 4.5% and your mortgage rate is 3.5% then don’t pay it off - you are effectively losing money.

I wouldn't wipe out your savings.

But you could pay off some and overpay the rest. If you cleared 30k from savings but then carried on paying the same amount - and perhaps a bit more - then you could probably have it done in two years and still have 40k in the bank.

Edited to say you need the Money Saving Expert mortgage overpayment calculator. It will compare to savings as well.

Thanks all.

That’s too simplistic. By paying off the mortgage early you might save thousands in interest, and investing isn’t guaranteed.

Incorrect - you can buy gilts/gov bonds at a guaranteed rate. Also cash isa interest is higher.

hi op definitely pay of the mortgage as others said the money you save each month will build a nest egg quite quickly also if your mortgage interest is higher than savings you will gain long term.

Our mortgage is 3.85% - we have made 25% this year on investments - I'd be investing paying off later.