Paying off mortgage decision

ascsbe

I have a morgage of £20000 payable on fixed rate of 5.59 over the next 8 years. To pay off this mortgage I would have to pay a penalty of £760.
I could easily pay off this mortgage using funds from various savings which are currently earning interest at about 4.5% gross.
I estmate that if I paid this mortgage off now, over 8 Years we would be approx £2500 - £3000 better off at the end of the period, and that I would be continuing to save the mortgage payment every month to replace the capital, and have calculated the approx. interest gained on this in the above figure.
The saving over 8 years is not dramatic and also it would obviously make a psychological hole in my capital initially.
I am very disciplined and will have no problem continuing to save the mortgage payments.
What is the view on paying off the mortgage in this case.
Thanks

tony1959

Hi ascsbe,

You might want to look at threads on page 5 titles 19.5k offset & 38k mortgage, I am 19.5k offset and my feelings were like yours but feel if I can clear the debt then it give me a sound base to rebuild from - like you I am now very disciplined in my savings/spending.

Regards
Tony1959

innovate

Is the psychological hole worth more to you than £2.5 - 3K more cash in hand in 8 years time?

Psychology doesn't pay bills, or fund a treat or luxury - money does! You are kidding yourself if you bring emotions into the equation.

Having said this: there might be psychological boosts if can say you own your property outright NOW, and think about the psychological boost you could give yourself in 8 years time with a £2.5 - 3K holiday!

Go on, settle that mortgage NOW! Should you unexpectedly need a larger sum of money over the next 8 years, as a home owner without debts you will have no problem getting credit - at rates comparable to your current mortgage interest rate, or even less (e.g. 0% credit card).