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    • Bitlost11
    • By Bitlost11 13th Feb 18, 11:44 PM
    • 5Posts
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    Bitlost11
    Interest only mortgage - do I pay it off
    • #1
    • 13th Feb 18, 11:44 PM
    Interest only mortgage - do I pay it off 13th Feb 18 at 11:44 PM
    Hello, very wise people. Wondering if any of you have a view on something for me!

    I have an interest only mortgage, of 55,000 (50% paid) and savings of 76,000 however I have no regular income, hopefully that will change over time, but currently not in good health.

    I have no dependants, and no one who will expect much when I die (hopefully 40 years away but as my bank have just called me it made me think!)

    Do I try to pay off mortgage or carry on with my 150 monthly interest payment (with 12 years left). I hate owing money but do I need to think of mortgage as debt or leave it for the moment.

    A curious dilemma but I hope it will make sense to someone and they can give me some clarity.

    Thanks in advance
Page 1
    • rumble55
    • By rumble55 14th Feb 18, 12:31 AM
    • 2 Posts
    • 0 Thanks
    rumble55
    • #2
    • 14th Feb 18, 12:31 AM
    • #2
    • 14th Feb 18, 12:31 AM
    Hi, pay off your mortgage - it's an incredible feeling! Whatever the world throws at you you'll be able to cope with.
    • AnotherJoe
    • By AnotherJoe 14th Feb 18, 8:07 AM
    • 8,229 Posts
    • 8,958 Thanks
    AnotherJoe
    • #3
    • 14th Feb 18, 8:07 AM
    • #3
    • 14th Feb 18, 8:07 AM
    Paying it off leaves you with a decent amount for emergencies and also likely will give you a better effective interest rate on your money than you are getting now. Eg if your mortgage rate is 3% (my guess from your payment) what rate are you getting on that £76k savings ? Probably not that much.

    It will also release the £150 a month, that could go into a high rate savings account.

    Only potential issue, is there an Early Redemption Charge you'd have to,pay ?
    • Mahsroh
    • By Mahsroh 14th Feb 18, 8:07 AM
    • 305 Posts
    • 265 Thanks
    Mahsroh
    • #4
    • 14th Feb 18, 8:07 AM
    • #4
    • 14th Feb 18, 8:07 AM
    Do I try to pay off mortgage or carry on with my 150 monthly interest payment (with 12 years left).
    Originally posted by Bitlost11

    Admittedly I'm no expert in interest only mortgages, but presumably if you pay off the mortgage in full, there will be no more interest to pay?
    • juniordoc
    • By juniordoc 14th Feb 18, 9:19 AM
    • 315 Posts
    • 258 Thanks
    juniordoc
    • #5
    • 14th Feb 18, 9:19 AM
    • #5
    • 14th Feb 18, 9:19 AM
    You could look at switching to a repayment mortgage so could keep most of the savings for now but at least you'd be working towards paying it off, by the time you reach retirement age is a good goal.
    • dimbo61
    • By dimbo61 14th Feb 18, 6:43 PM
    • 9,754 Posts
    • 5,254 Thanks
    dimbo61
    • #6
    • 14th Feb 18, 6:43 PM
    • #6
    • 14th Feb 18, 6:43 PM
    You have savings of £76,000 and your not in good health or working.
    If you can pay off your mortgage with no fees to pay I would do so.
    You can't claim any benefits if you have £76,000 in the bank.
    • Thrugelmir
    • By Thrugelmir 14th Feb 18, 6:48 PM
    • 57,453 Posts
    • 50,745 Thanks
    Thrugelmir
    • #7
    • 14th Feb 18, 6:48 PM
    • #7
    • 14th Feb 18, 6:48 PM
    You can't claim any benefits if you have £76,000 in the bank.
    Originally posted by dimbo61
    Was intending to say something similar.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • Bitlost11
    • By Bitlost11 17th Feb 18, 10:23 PM
    • 5 Posts
    • 2 Thanks
    Bitlost11
    • #8
    • 17th Feb 18, 10:23 PM
    • #8
    • 17th Feb 18, 10:23 PM
    Thank you all so much !!!55357;!!!56397;
    • enthusiasticsaver
    • By enthusiasticsaver 17th Feb 18, 11:27 PM
    • 5,702 Posts
    • 11,261 Thanks
    enthusiasticsaver
    • #9
    • 17th Feb 18, 11:27 PM
    • #9
    • 17th Feb 18, 11:27 PM
    Presumably you will have to pay it off eventually. What was the original term and what were the plans for paying it off?

    Lenders don't like interest only mortgages so it might be best to have some plan to repay.

    As someone else pointed out you will be excluded from some benefits if you have that much in savings.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • silvercar
    • By silvercar 18th Feb 18, 8:33 AM
    • 36,672 Posts
    • 154,766 Thanks
    silvercar
    Im not sure I would pay it off. I would keep the mortgage amount aside so I knew I could clear it if necessary and at the term end.

    Depends on your health, you may decide that should your health deteriorate further, you would prefer to take world cruises and not worry about your mortgage. Or your health could improve and you earn again.

    I would think that once cleared you can never get the savings back, so I would be reluctant to lose the savings at this point.
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