pay off or invest?

Lokolo

Question is, what would the OP do with the extra £150 a month?

But generally, although I would normally agree with investing the money, at his age (I am assuming as you are retired but still working so you aren't exactly my age....) I would want to get rid of the mortgage.

I don't plan having a mortgage by the time I retire, and I would like to know that the house is fully mine by the time I do.

However, if it were me in the same position (although I would be surprised at getting a £30k refund from a final pension thingy ma bobby at 20.... ) I would of course invest the money.

DiggerUK

dunstonh wrote: »

Its not as simple as that though is it. You could pay 4% interest on one hand and get 7% income on the other.

If the money could be used to obtain a greater amount than the interest being paid on the mortgage, fine.
Even if 7%+ could be realised it would only work out if everything remained the same re future mortgage payments, which is not likely.
The security of a roof over your head, that is forever yours, is a powerful position to be in.

DiggerUK

Lokolo wrote: »

Question is, what would the OP do with the extra £150 a month?
QUOTE]

If WaxiesDargle wants a few ideas, then all that is needed is a new thread, "What do I do with an extra 200 pound a month"

Then I could talk about my gold fetish.

Primrose

I guess it all depends on your own attitude to debt. My personal inclination would be to clear the mortgage debt first because psychologically I hate debt of any kind hanging over me. That will give you spare money every month and the opportunity to use as much as possible of your annual ISA allowance which is being increased from next month. On the other hand, while you're currently a 40% taxpayer, if you can't afford to max out on your ISA allowance this year, some of that refund might more usefully go towards maximising it while your earning power is still higher.

dunstonh

See what I mean about different risk profiles. The lower risk individuals prefer to clear mortgage. The medium to higher risk prefer to invest.

I have investments and I have a mortgage. That puts me in the prefer to invest catagory. However, I have also upped my monthly payment into the mortgage with overpayments. So, I am hedging my bets a bit.

There is no right or wrong to this. Its purely a matter of personal opinion.

Jonbvn

dunstonh wrote: »

I have investments and I have a mortgage. That puts me in the prefer to invest catagory. However, I have also upped my monthly payment into the mortgage with overpayments. So, I am hedging my bets a bit.

That's what we do. We make sure our ISA's and pension provisions are full then overpay on the mortgage. With the forthcoming increase in the ISA allowance, we may reduce mortgage overpayments accordingly (not sure yet).

bendix

DiggerUK wrote: »

I've heard this story before about being less credit worthy, after clearing off debts and mortgage.
Being debt free means we don't have a great need for credit anyway, and in nearly 10 years we have been mortgage free, have never had a problem.

All our credit references show, are that bills are paid on time, and there are no late payments. I think it's more an old wives tale than for real.

If you want to pay interest when you don't need to, go ahead, it's your money at the end of the day. We just don't like giving the banks a penny more than we have to.

I agree. I think this credit-worthiness obsession has gone too far. I have only been back in the UK for six months after living overseas for 15 years, and I've had no problem at all getting credit cards etc. I'm not even on the electoral roll, and noone has asked for proof of income. I guess i have an honest face.

Dunno what all the fuss is about.

WaxiesDargle

Thanks again all

I'm 53 and as it stands do not have an ISA ...so that's the way to go first I think (only one, as I'm single)....then pay off some of my mortgage to bring it down a bit then invest the rest. Now I have this job I will be able to afford overpayments on the mortgage

Talk about hedging my bets!

Ps just been told it's £34,000 (interest added over 3 years)

jamesd

dunstonh wrote: »

Its not as simple as that though is it. You could pay 4% interest on one hand and get 7% income on the other.

Or do as I did and pay 3% fee for a credit card balance transfer at 0% for 15 months and invest the money. Made a little bit of money from that. Hopefully will continue to do so.

But investing it instead of putting it in savings accounts is beyond the risk tolerance of many people. Others just won't like the idea of the borrowing.

For myself, my low risk is trying to get to the point where I can live as I do now without a job as soon as I reasonably can. About 2.5 years to go... though doing well on the investments would reduce that a bit. 100k accumulated in about four years so far.

jamesd

Hedging your bets is a good thing.