Mortgage-Free Wannabe Welcome and Explanation

gypsygypsy

I have about 10k left on my virgin mortgage, is it best to pay it off asap or to keep it going??

Sloppy_Saver

keep it going, if you ever need to borrow in the future it is much easier to increase an existing mortgage than to remortgage. Keep some "Just in case" money in a cash isa... just in case.

bevrmn

we chnged our mortgage in 1989,and borrowed £33,000, endowment mortgage. We missed some endowment payments, and the lender wrote saying that they would change the mortgage to repayment. However, it was only approx 2 years ago I realised they did not change it, and we have been paying interest only, so we still have a debt of £33,0000 !! it is due to finish in 2014, but we will still owe £33,000, any ideas how to sort this out ?

daisy_may

does anybody know of any bank which will give a remortgage to people on DSS?

frugalista_2

MSE_Martin wrote: »

Why?

Paying off your mortgage is the best risk-free way to use your cash. Think of it like this:

If your mortgage is at 5% interest, by paying it off you get the effective return of 5% after tax. This means a basic rate tax payer would need to earn 6.25% and a higher rate taxpayer 8.33% before they were better off and there's no real way of doing that with a lot of money without taking a risk.

I think the assertion that repaying mortgage debt is the best risk-free way of saving is an oversimplification.

Putting money in a cash ISA gets basically the same tax free return and has the advantage that the money can be withdrawn immediately in an emergency, not always possible with mortgage overpayments.

NS&I investments are tax-free, allow more than ISAs and some of them track inflation rates too.

The interest rates on these tax-free savings plans may also be higher than your mortgage rate.

Also, if you are prepared to take risks (that's a big if!) remember you get about £8.5k of tax-free capital gain per year. So if you put £100k into an investment and its value increases to £108,500 you have done far better than you would have done by paying off 100k of mortgage.

Furthermore, if you are happy for your savings to be locked into a pension plan (another big if!) then there are massive tax breaks for doing this which outweigh the tax benefits of overpaying your mortgage. Especially if you are a higher rate taxpayer, 60p paid into your pension translates to £1 of tax free savings, whereas 60p paying off your mortgage translates to 60p of tax free savings.

I am planning to buy a property in the next few years and I will be putting certain amounts into paying the mortgage off early, but I will also be putting some amounts into some of the above schemes as well.

frugalista

Battleaxe_3

A year or so ago I subscribed and published my current debts when I replied to a couple of posts. My experience of this forum has been quite negative because my published debts were received with disdain and it seemed to be a competition as to how much debt each member has.

My situation was quite severe at the time, I was diagnosed with cancer aged 34, single parent to a 9 year old daughter, working full time but unable to fulfill contract because of my medical requirements. At the time I was in desparate circumstances, however things have improved and I am now in remission.

My point is please do not send filppant remarks via this forum. Each individual has circumstances which no one else should judge.

The result of that one comment stopped me from reading or contributing to this forum, and I feel that I have been short changed. The otimism and support that I could have received during my darkest days may have helped me both emotionally and practially.

Sorry, this may be the wrong place to post, however, it is what I need - TO BE MORTGAGE FREE.

Miss_Penny_Pincher_2

Welcome back to the forum Battleaxe - I'm very saddened to hear about your negative experiences especially at such a difficult time in your life. I do hope you find it improved now and, although there are still a couple of subversive posters / trolls around, the majority are helpful

I'm also keen to pay of my mortgage as soon as possible... I find this thread which only started a week ago very supportive and optimisitic (there are even a few cheerleaders!):

http://forums.moneysavingexpert.com/showthread.html?t=435291

It would be great if you want to join with your own personal challenge!

Penny x

Oskar's_Grandad

Hi, this is my first post.

I have been following Money Saver for two years now and became very interested in his ideas to become mortgage free. Last year (2006) my wife and I set about to do just that. We cashed in our endowment, pulled in a couple of savings accounts and paid of part of the mortgage with that. We then used the money we were saving to build up a savings account, meanwhile, we still paid off the same amount (including money that was going in to the endowment) from our original borrowing.

On December first 2006, we had enough money to pay off our mortgage 5 years early, and our two car loans. I estimate the total savings of £14,000. We are now £800.00 a month better off, we have taken semi-retirement and only work about three days a week each. All the pressure of having to earn has gone, we don't argue any more and life couldn't be sweeter.

Thank you Money Saving Expert, because without reading your articles, I would never have put the idea together.

The point of me posting this is simple. If we can do this, so can all of you out there. Good luck.

GreenNinja

Maybird,

My parents went through this dilemma when I was a kid, had a sister and brother also. We were in a 3 bed semi with myself and my sis sharing and little bro in the tiny box room.

They decided to stay put as couldn't afford to move to a bigger house. I think that now it has been proved to have been the right decision. They are now in their 80s and in a house that is small enough for them to manage and the income they have from their pensions they use to go on holiday, buy what they want and enjoy themselves.

At the time that we were all in further education my parents forked out for a lot of these costs although we all did paper rounds and saturday jobs and babysitting to be able to afford money for going out, buying stuff for college etc. It was good that they were able to help us with this as all 3 of us had a good start in life and had no debts to repay when we started work.

I am really glad it worked out this way for my parents as they are now benefitting.

Hope this helps your decision.

GreenNinja

Would love to be mortgage free and like some other posters, the idea wouldn't even have occurred to me until after watching the TV programme, how to pay off your mortgage in 2 years and then finding this site by accident!

My mortgage currently stands at 30,000 with 12 years left on it, endowment mortgage. Only allowed to pay off 10% this year and next, so am determined to spend the remainder of this year saving that 3000.

:j