Should we use savings to pay off mortgage?

[elliott]

Ok so apologies to those of you struggling out there - suggest you don't read this thread...
We have a small mortgage and I am pondering whether to make getting rid of it my first priority for savings. We're currently on a SVR (about 3.7%) having totally missed out on the tracker concept. Costs of remortgaging vs size of mortgage not worthwhile.
We have a few cash ISAs which could be used to clear the debts. Can't decide if this is a good idea or not.

i don't see why you're apologising to those of us not doing well, it's not like you caused that!

I would clear the mortgage unless you have something else you really want to buy. This is because while ou are receiving interest on your savings, you are still PAYING interest on your mortgage.

If you clear both, and start from scratch, it won'tmatter what happens to the interest rates next - the house will be yours and you will have no mortgage that could go up.

If you are paying 3.7% interst out of post tax income< you need to be earning 3.7% plus approx 33.33% for base rate tax to be breaking even. Add another 20% for higher rate tax - so unless you are earning at least 6-7.5% per year on your isa's it makes sense to cash them and pay off mortgage - UNLESS:

You will then leave yourself needing to borrow at consumer credit rates ( eg 8-20%) in the near future.

Mortggage borrowing is the cheapest credit genrally.

Plus don"t leave yourself without an emergency fund - ie cash you can get at asap

hth

Thanks. It probably does make sense. I suppose I have a psychological barrier about giving up my tax free ISAs- once they are gone they are gone. I keep thinking if I had never spent any of my cash ISAs I'd have a pretty tidy nest egg by now!
Other things in the mix - I have an offset mortgage so not actually paying interest on whole balance. Plus if I pay down most of it without paying it off completely, I can still access that credit instantly so it makes a good alternative to an emergency cash savings account.
(I am only apologising because I am aware that it will make galling reading to some people...)

You need to do the maths on the actual interst you are paying and then balance against your personal financial comfort zone.

I would personally keep the offset mortgage open with say #5 or #10 K and pay the rest off, but money is personal as well as practical