Pay it off or not?

richrimmer

Hi,

I have been reading Martin's emails for ages now and have saved a fair bit by acting on the advice given but have never used the forums before....so hello!

Anyway, I am veryfortunate that my mortgage is very small (£43k bought at the right time in the right place, purely by chance - luck not judgement) and even more fortunate that I was recently left some money by a relative that more than covers the mortgage amount.

So what I did was get an offset mortgage. I now balance the two accounts so that effectively I am paying no interest on the mortgage but still have a nest egg should I need it. I then slowly feed the money back out to an interest bearing account as the mortgage amount comes down.

So my question is this.. It seemed the logical thing to do at the time but am I missing something and would I be better off by paying the mortgage off and being debt free?

Thanks in advance for any feedback.

Joe_Bloggs

You are debt free ! You have more in savings that your debts. Watch out for paying tax on the interest you are paid. There are tax free ISA alternatives.
J_B.

richrimmer

Thanks Joe.

I've got an ISA going for this year. I just wasn't sure if there was a drawback to offsetting like I have rather than paying the mortgage off fully.

roswell

as its offset your term should be decreasing, alternatively you could use the money you take outthe nest egg each month to overpay the morgage if you want to be morgage free tot he extent that there is no debt on the property.

personally im just offsetting 100% and moving money out each month like yourself, i havent reduced or increaed the amount I pay as effectively by not generating any interest im making overpayments each month anyway.

I see it as if I become redundent i have the money to clear the debt but if i stay employeed im happy to have the payments coming out my normal take home pay, Its all choice really

halloweenqueen_2

I think personally I would rather have it gone. If you were to be come unemployed/ill you wouldn't get any help financially because you'd have too much money in the bank - possibly?
Its personal choice if you feel happier having the money there and its not costing you anything leave it, if you would rather have the mortgage done, dusted and behind you pay it off.
Good luck whatever you decide to do, it must be a lovely feeling to know you are effectively mortgage free!

deepseadiver

Personally I would pay off. Sensibly though, it may be wise to have 6 months salary put to one side before doing so. Depends on how safe your job is I suppose?