Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • alanwearing
    • By alanwearing 14th Apr 17, 10:36 AM
    • 5Posts
    • 0Thanks
    alanwearing
    Pay off mortgage or save
    • #1
    • 14th Apr 17, 10:36 AM
    Pay off mortgage or save 14th Apr 17 at 10:36 AM
    Hi Just throwing this out there for advice
    I want to retire in 18 months, but owe 20k on mortgage and have savings of 53k, trying to build a retirement fund and pay off one fights against the other. I am able to overpay the mortgage and I am doing so. Thanks
Page 1
    • enjoyyourshoes
    • By enjoyyourshoes 14th Apr 17, 11:17 AM
    • 707 Posts
    • 896 Thanks
    enjoyyourshoes
    • #2
    • 14th Apr 17, 11:17 AM
    • #2
    • 14th Apr 17, 11:17 AM
    Paying into SIPP you will get tax relief on contributions.

    Compare interest on savings vs mortgage?

    St up regular savings as they often give better rates than current interest rates on mtge ?
    Debt is a symptom, solve the problem.
    • leicestersq
    • By leicestersq 14th Apr 17, 12:30 PM
    • 53 Posts
    • 77 Thanks
    leicestersq
    • #3
    • 14th Apr 17, 12:30 PM
    • #3
    • 14th Apr 17, 12:30 PM
    Are you receiving more interest on your savings net of tax than you are paying interest on your mortgage? If so save, if not repay.

    Put your money where the highest interest rate is.
    • alanwearing
    • By alanwearing 14th Apr 17, 12:35 PM
    • 5 Posts
    • 0 Thanks
    alanwearing
    • #4
    • 14th Apr 17, 12:35 PM
    • #4
    • 14th Apr 17, 12:35 PM
    Thanks for that, not looked at SIPP, I am in receipt of a private pension £3.68k/yr the £53k is pension lump sum plus monthly payments
    • alanwearing
    • By alanwearing 14th Apr 17, 12:42 PM
    • 5 Posts
    • 0 Thanks
    alanwearing
    • #5
    • 14th Apr 17, 12:42 PM
    • #5
    • 14th Apr 17, 12:42 PM
    I receive 1.5 % interest on savings £53k
    I pay 2.83 % interest on my mortgage 10 years to go no repayment penalties
    owe £20k
    • datlex
    • By datlex 14th Apr 17, 12:46 PM
    • 1,240 Posts
    • 1,057 Thanks
    datlex
    • #6
    • 14th Apr 17, 12:46 PM
    • #6
    • 14th Apr 17, 12:46 PM
    OP Have you worked out how much you need to over pay to be able to be mortgage free? This might give you a happy medium.
    • phillw
    • By phillw 15th Apr 17, 3:31 PM
    • 588 Posts
    • 252 Thanks
    phillw
    • #7
    • 15th Apr 17, 3:31 PM
    • #7
    • 15th Apr 17, 3:31 PM
    I receive 1.5 % interest on savings £53k
    I pay 2.83 % interest on my mortgage 10 years to go no repayment penalties
    owe £20k
    Originally posted by alanwearing
    If you want to make the most of your money and can get hold of your savings penalty free then pay the mortgage off today. You are borrowing 20k at 2.83% to save it at 1.5%, losing 1.33% in the process.
    Last edited by phillw; 15-04-2017 at 3:35 PM.
    • Jo Blogs
    • By Jo Blogs 15th Apr 17, 4:03 PM
    • 666 Posts
    • 2,140 Thanks
    Jo Blogs
    • #8
    • 15th Apr 17, 4:03 PM
    • #8
    • 15th Apr 17, 4:03 PM
    If you want to make the most of your money and can get hold of your savings penalty free then pay the mortgage off today. You are borrowing 20k at 2.83% to save it at 1.5%, losing 1.33% in the process.
    Originally posted by phillw
    I agree with phillw. Better to pay off the mortgage and save money, than to lose money by saving at 1.5% at the moment.

    As an additional thought have you looked into current accounts and regular savers? some of these are offering between 3-5% at the present time. Perhaps you could drip feed some of your savings into better regular saver accounts. It might need some work, but it'll be worth it in the end

    Here are a couple of links that might be of interest:

    http://www.moneysavingexpert.com/savings/savings-accounts-best-interest?&_ga=1.148204023.1744183518.1487582411#cu rrentaccount

    http://www.moneysavingexpert.com/savings/best-regular-savings-accounts
    Saved Nitty Gritty £6585.48 [132%] / £5000-[July] £235.16 for the 'Save 12k in 2017' #157
    2017 Womble #35 £3835.97 June NSDs 21/15CCCChl 34/52 weeks
    June PPChl#002 Pts 25
    • phillw
    • By phillw 17th Apr 17, 8:47 AM
    • 588 Posts
    • 252 Thanks
    phillw
    • #9
    • 17th Apr 17, 8:47 AM
    • #9
    • 17th Apr 17, 8:47 AM
    As an additional thought have you looked into current accounts and regular savers? some of these are offering between 3-5% at the present time. Perhaps you could drip feed some of your savings into better regular saver accounts. It might need some work, but it'll be worth it in the end
    Originally posted by Jo Blogs
    I agree that finding somewhere higher than 1.5% for the remaining £33k after paying his mortgage would save him money. But current accounts and regular savers won't dent it, leaving most of his savings at a paltry 1.5%.

    If the mortgage is paid and you have money in the bank, the next step is trying to find a decent investment.
    • Exerbusi2
    • By Exerbusi2 19th Apr 17, 7:54 AM
    • 232 Posts
    • 152 Thanks
    Exerbusi2
    Is there a half way house? Pay off £10k of the mortgage, therefore not dent the savings too much, but also take a massive chunk out of the mortgage?
    Loan £5000 £0; Overdraft £700 £0
    Savings £0 +£1500; Share Portfolio £0 +£4000
    £0 Credit Card £6800 £1700
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,503Posts Today

6,341Users online

Martin's Twitter