Should I use my redundancy to pay off our mortgage?

vandanfc

No expert here:

Just an idea, but what about switching to an offset mortgage - then using redundancy monies to pay off a lump sum. Leaving £12000 mortgage. Then cash in some of the premium bonds and put into offset. Make some sort of payment each month to reduce the £12000 mortgage. You still have access to the £25000 if really needed it.

redz

In a nutshell. Working age means tested benefit it's deprivation of capital. Pension age means tested benefit it isn't.

getmore4less

Since the total is £48k(net/gross?) you have a significant tax bill fom the redundancy payment.

You might want to look at your tax position and pension for this tax year.

Another option is to look at getting the payout over 2 tax years to reduce the tax.

happywarmgun

Best of all worlds has already been suggested switch to an offset mortgage (e.g virgin one) then pay off in full. If you need any money at all in the next few years you can withdraw an amount up to the value of your mortgage instantly.

I am in a similarish situation (just paid off my mortgage with redundancy money) but am not closing my mortage account to retain the flexibility and financial security. It is costing me nothing whatever to have my one account sitting there with a balance of zero - but I have huge piece of mind I could go out and spend 100 grand tommorrow on switch if there was an emergency.

TR4

Funnily enough I too have just used part of my redundancy to pay off our remaining mortgage (and my redundancy was nowhere near £48k!).

We had no other debts, other than the mortgage.

The thing that helped us to decide was the psychological benefit of knowing that we would not owe anyone a penny. Whatever the future bought, we owned our house and our family's home was secure.

Someimes, you can dither and faff about whether you might have got a 1/4% benefit by saving it here or there, but nothing beats the feeling of not owing a penny to anyone.

You would obviously still be entitled to your Jobseekers Allowance of £54 per week and if you can live on your other half's income whilst you jobsearch, I'd say "pay it off"