Should we pay off the mortgage or contue with savings

whitesatin

Hi, I am 58, almost, and my husband almost 51. I have retired but still do a bit of work as and when. I have a pension of about £670pm net. My husband would like to take early retirement at 55 when we want to move away from this area to one of equal housing costs. We still have a mortgage of around £85,000 due to continue for around 9 more years. The fixed rate is due to expire this September and we are looking to find a better deal, considering, maybe an offset mortgage. We do have savings worth at least the mortgage, tied up in mostly ISAs and a good holding of premium bonds. I am trying to persuade my husband to either pay off the whole mortgage or at least a chunk of it when it comes up for renewal but he is very reluctant to put all his eggs in one basket. There are a couple of endowments on the mortgage, one due to pay out Jan 2012 and the other in a few years after that. We continue to pay them though we know they won't cover what we intended them to.

I would love to be mortgage free as I have had a mortgage since I was 21 on one property or another. When he takes retirement (early) he will have to take a reduced pension, as I did, but our joint income would be around £25,000 as I will also have a state pension by then. I think that would be fine to live on if we have no mortgage. Meanwhile we could save the £600pm we pay on the mortgage for the next 4 years whilst continuing to pay the endowments which would at least give us some money later on.

Should I be continuing to try to persuade him or is he right to keep the mortgage going?

StuartGMC

You may want to seek IFA input on this.

That said, the offset would seem the logical approach if you choose one which includes your current a/c and allows the Cash ISAs to be offset too. That way, you keep the Cash ISAs in their wrapper, simply using them to minimise interest charged whilst you use them for offset, then once MF you still have them protected.

Are the Premium Bonds actually worth it? Look at what you are getting as "interest" compared with the amount you are being charged as interest on the mortgage sum of the same value. Why not move to offset savings/pay down the mortgage?

Remember to check the T&C but typically offset mortgages will let you OP by whatever amount you want and there's usually no ERC so getting those endowments then paying down lump sums would be feasible.

I hope you can clear things quickly, but do consider getting advice on this and whether lenders will be happy to offer you the loan if OH retires early too.