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  • FIRST POST
    • Type 45
    • By Type 45 16th May 17, 10:09 PM
    • 26Posts
    • 3Thanks
    Type 45
    Pay off mortgage or invest...
    • #1
    • 16th May 17, 10:09 PM
    Pay off mortgage or invest... 16th May 17 at 10:09 PM
    Hello...

    I have a great mortgage. 0.75% above BoE base rate: (1% at present). My mortgage is about 145K and my house is valued at 375K (so 230K equity). I am in the process of house hunting, however. And I am moving to a cheaper city.

    I therefore have a couple of options:

    1) Use my 230 equity to buy my new property and have no mortgage at all.

    2) Keep all, or part of my mortgage and free up cheap (1% interest) funds. I have confirmed with my mortgage provider that I can do this.



    What say the good people of MSE?
Page 2
    • Ray Singh-Blue
    • By Ray Singh-Blue 17th May 17, 9:10 PM
    • 300 Posts
    • 381 Thanks
    Ray Singh-Blue
    Having three strands to play with (house, loan, investment) rather than one (house) makes you more bendy

    Lets say someone wants to downsize. If they have a house, a mortgage, and investments, then they have the option of buying their next home with their investments. Then, when that's all sorted, they can sell their existing home and pay off their existing mortgage.

    They don't have to do that, but it is a flexibility they would not have if they had just overpaid their mortgage
    • atush
    • By atush 18th May 17, 12:52 PM
    • 15,812 Posts
    • 9,584 Thanks
    atush
    It depends on your view of risk and it depends on the person. If you think you might ever need to claim some form of benefits then having a huge investment porfolio will cause you problems. They take a dim view on you cashing in your investments and paying off the mortgage to qualify.

    I have missed out on making money, but right now I'd rather just have no mortgage.
    Originally posted by phillw
    That is an emotional decision, not necessarily a rational one.

    But hey, if you are happy, go for it.
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