Should I Pay Off A Lump Of My Mortgage?

katyshaw

Hi there

My dad has just retired from teaching and has received his lump sum from the teachers pension scheme. He wants to use it to pay a sizable chunk off his mortgage reducing the monthly payments for Abbey from around £980 to £220. Is this the best time to be paying off a mortgage? He is now going supply teaching so has no fixed income and reckons that lower mortgage payments are the better option in the long run. Plus hes from the generation of people who hate owing anything! But Im not sure whether hes doing the right thing. Can anyone advise?
Katy

ad9898_3

Hi , I think its probably the best thing you can do, the amount of interest you pay on a mortgage is absolutely huge and will only get worse in the current climate

As long has he has enough money to live after he's done that.

Locoblade

Is he able to change to an offset account with Abbey, then he could put the money in the offset pot, having the same effect as a straight overpayment, but he could always get at some or even all of that money again if he needed to.

He may be able to do this anyway if Abbey allow him to withdraw any overpayments, but its self managed if you've got an offset, you can get at it whenever you like (which i guess could be a problem if not disciplined!)

dimbo61

He should first fill a cash ISA as an emergency fund.
What rate is he paying on his mortgage and will he have to pay any penalties ?
There are lots of people on the mortgage free board who are also trying to clear or reduce there mortgage BUT if all his wealth is tied up in a house and he has not got enough to live on he will find life difficult.
He could then sell up and rent a retirement flat or smaller house/bunglow BUT the housing market is also very difficult.
Clearing some of the mortgage while keeping some money in savings to help with living expenses might be a good idea ! GOOD LUCK WITH DAD