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  • FIRST POST
    • TomSurrey
    • By TomSurrey 15th Jul 17, 12:26 PM
    • 20Posts
    • 16Thanks
    TomSurrey
    Why would I want to pay my mortgage down?
    • #1
    • 15th Jul 17, 12:26 PM
    Why would I want to pay my mortgage down? 15th Jul 17 at 12:26 PM
    Hi everyone, bit of advice please. Our scenario is:
    - Couple are 36 and 44 years old, annual income of about £175k gross between us.
    - Moved house 2 years ago
    - £1,175,000 house value (predicted)
    - £700,000 mortgage
    - About to move onto a 10 year fixed mortgage at 2.49%
    - We put additional savings into pension contributions (25% of our salaries inc company matching amount) and ISA (share savings) about 20k per year but likely to increase this.

    Why would we consider paying down the mortgage as opposed to saving it and reducing our marginal tax bill now? in 11 years time we intend to use tax free 25% of older one of ours pension to pay off much of the remaining mortgage.

    I have lots of friends who focus on paying off mortgages but I see the better investment in a low interest rate environment (over a 10 year period) being equities and reducing my current tax rate?

    Its a genuine question as i'd consider not saving as much into our pensions and ISA investments and paying off our mortgage.
Page 1
    • Debtslayer
    • By Debtslayer 15th Jul 17, 12:55 PM
    • 430 Posts
    • 599 Thanks
    Debtslayer
    • #2
    • 15th Jul 17, 12:55 PM
    • #2
    • 15th Jul 17, 12:55 PM
    For me personally it's so that I own my house outright and have no debt.
    Also it makes more sense to pay down the mortgage as the interest is higher than current savings accounts.
    Reference your own mortgage, how long have you got left on your mortgage? Do you want to be rid of the financial debt of a mortgage as soon as possible or you would prefer to save the money elsewhere?
    Everyone is different and only you can decide what is best for you, maybe with the help of a financial advisor though?
    Current Mortgage 01.10.17 £113,513.88
    MFW Start Mortgage: £114,794.64
    Current MED: 2036 Target MED: 2026
    Overpayment Target for remainder of 2017: £2,000
    Mortgage overpayment savings: £684.80
    MFW No 124
    • wishingthemortgaheaway
    • By wishingthemortgaheaway 15th Jul 17, 2:17 PM
    • 583 Posts
    • 2,231 Thanks
    wishingthemortgaheaway
    • #3
    • 15th Jul 17, 2:17 PM
    • #3
    • 15th Jul 17, 2:17 PM
    Everyone does it for different reasons. I can only speak for mine.

    I don't like owing money - what if the loan is suddenly called in and I can't pay? (I know that that is such a tiny risk as the whole banking world/economy would collapse if they started calling mortgages in, but I'd rather not risk it)

    I'd like to have more cash in my bank than money I owe.
    A few months ago we had reached the point where our savings and mortgage were the same amount, but we've spent some money in recent months as I'm on an extended maternity leave.

    It's a challenge , I like a challenge, I'm quite competitive. I feel like I'm in a battle between me and the mortgage. I will win (it is a bit addictive)

    We'd like to rent out our current home in the future to provide an income before and during hubby'S retirement (stil 20+ years away, but always plan)

    Interest is higher on mortgage than savings so I'm saving money.

    I don't understand what you are saying about the tax and equities, your circumstances are different to ours. So I don't know if overpaying on your mortgage is of benefit to you compared to another approach.

    But... if you do decide to overpay and become mortgage free there are many on this board who will help & encourage and keep you going. They have the best tips.

    Let us know what you decide.

    Wish.
    Last edited by wishingthemortgaheaway; 15-07-2017 at 2:24 PM. Reason: Click send too soon!
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