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  • FIRST POST
    • meggiemoo1234
    • By meggiemoo1234 5th Sep 17, 4:10 PM
    • 1Posts
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    meggiemoo1234
    Do you use savings to pay off some of the mortgage
    • #1
    • 5th Sep 17, 4:10 PM
    Do you use savings to pay off some of the mortgage 5th Sep 17 at 4:10 PM
    Views and advice would be welcome.
    Both my husband and I own our own small business. Over the years we have done quite well and managed to save a little. This year it has all changed as our work has decreased therefore our salaries are smaller. One of us may even go out to work part time with someone else.
    Our mortgage is due for renewal in October. We still owe £44,000 which is planned to pay off over the next eight years.
    My thoughts when looking for a new mortgage are - due to the decline in our salaries, not very good interest rates and mortgage rates possibly going up that we use our savings to pay off £20,000 on changing. Then our monthly rate would obviously go down and in the long run we would be saving. OR just change mortgages withouth paying off any.
    Would be grateful for any advice Thank you
Page 1
    • bengalknights
    • By bengalknights 5th Sep 17, 4:20 PM
    • 4,158 Posts
    • 1,518 Thanks
    bengalknights
    • #2
    • 5th Sep 17, 4:20 PM
    • #2
    • 5th Sep 17, 4:20 PM
    I would suggest pay the mortgage down as this way you will shorten terms pay less interest and have lower outgoings
    • wishingthemortgaheaway
    • By wishingthemortgaheaway 5th Sep 17, 7:30 PM
    • 566 Posts
    • 2,159 Thanks
    wishingthemortgaheaway
    • #3
    • 5th Sep 17, 7:30 PM
    • #3
    • 5th Sep 17, 7:30 PM
    But, do you need the security of those savings in a time when your jobs are in a fragile situation? Have you got other savings you could fall back on?
    What about an offset Mortgage where the savings are massively reducing your interest, but still available if needed?
    The 100 payment countdown (each payment = £400)
    2017 July : £36,800 8/100 Aug: £36,411.85 8/100 Sep: £35,945.66 10/100 Oct: £35,500 11/100
    Term Mortgage free date: October 2029
    Current mortgage free date: April 2025
    • beanielou
    • By beanielou 7th Sep 17, 3:57 PM
    • 48,483 Posts
    • 178,303 Thanks
    beanielou
    • #4
    • 7th Sep 17, 3:57 PM
    • #4
    • 7th Sep 17, 3:57 PM
    But, do you need the security of those savings in a time when your jobs are in a fragile situation? Have you got other savings you could fall back on?
    What about an offset Mortgage where the savings are massively reducing your interest, but still available if needed?
    Originally posted by wishingthemortgaheaway
    Agree with this.
    Lou~ Debt free Wanabe No 55 DF 03/03/14.
    **Credit card debt free 30/06/10~** **Weight loss 2 stone 2 lbs **

    "A large income is the best recipe for happiness I ever heard of" Jane Austen in Mansfield Park.
    ***Fall down seven times,stand up eight*** ~~Japanese proverb.
    It starts with you, it starts from now. *** It is ok to be me.*** ***Keep plodding***
    • Anonymous101
    • By Anonymous101 7th Sep 17, 4:21 PM
    • 1,010 Posts
    • 368 Thanks
    Anonymous101
    • #5
    • 7th Sep 17, 4:21 PM
    • #5
    • 7th Sep 17, 4:21 PM
    I would suggest pay the mortgage down as this way you will shorten terms pay less interest and have lower outgoings
    Originally posted by bengalknights
    I'd suggest the opposite. Keep the money invested in equities as long as you can and don't over pay the mortgage until you want/have to.

    Currently mortgage rates are so low there's a clear difference but even over the history of the stock market the annual return on equities is 9.5% vs the average mortgage rate of 6.5%. That 3% on £100,000 or more can make a HUGE difference over 10-20 years, especially when compound interest is considered.

    But, do you need the security of those savings in a time when your jobs are in a fragile situation? Have you got other savings you could fall back on?
    What about an offset Mortgage where the savings are massively reducing your interest, but still available if needed?
    Originally posted by wishingthemortgaheaway
    I agree... if you invest the overpayment amount within a S&S ISA its available should it be required.

    Savings for a buffer / fall back, in cash, should be put before any thought of over payment or investment IMO.
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