Mortgage - to pay off or keep?

[HardonCollider]

I’m after some opinions please..

We're in the lovely position that we could pay off our mortgage when it’s due for renewal in a few months time. However, we may want to move in the next year or two and borrow more.

Are we best paying off this mortgage and having less savings for the next purchase, or should we keep the mortgage and add to it for the next house? Not sure if it would make it easier when the time comes to already have a small mortgage in place rather than making a totally new application.

I may be overthinking this but would welcome some opinions!

What interest rate are you on at the moment?

if it’s still pretty low and you’re planning on moving soon I’d keep the money in as higher rate savings as you can. You will need money accessible for the move.

It’s currently 5.7% but we can easily lower the rate when it renews, if we renew. It’s looking like around 3.6-3.8% is likely.

You should be able to get 4% instant access savings. It depends really on the timescales for moving.

Unless you have an exceptional low mortgage rate and a high rate on saving or paying off the mortgage would totally wipe out your savings, such that you would have a problem if you needed a new boiler / major repairs, pay the mortgage off and save as much of your current repayment as you can into a high interest account. This might be a good time for a cash ISA rather than stocks and shares, as you are looking at relatively short term investing.

I guess it depends - are you likely to have a change in circumstances where you wouldn’t get approved for a new mortgage in a few years when you want to move? it’s easier to get a mortgage if you already have one, especially if you stay with the same lender. If not then I would pay it off and avoid paying any more interest as you aren’t on a particularly low interest rate.

Pay off your mortgage and then pay the money you were paying into an instant access ISA. On a monthly basis. This will be good for your deposit for your next house.

If you’re easily able to make your mortgage payments, don’t pay it off. It’s not a particularly good use of money and, as a PP said, it’s easier to get a mortgage if you already have one.

If you need to borrow more money it will be a new application regardless. It may be worthwhile calculating the costs to move stamp duty, estate agent fees, solicitors fees etc and if you are thinking of a new build don’t forget the additional flooring you will need to move in.

hold this money back as it will make it easier down the road/ gives you negotiating power with new builds.