Pay off or not pay off

Shizaro

Here is my situation :-

I currently owe just £34,000 on my mrtgage, I pay nearly 3 times my minimum payment every month to pay it off early.

My son is about to go to university, and I have to stump up about £20,000 over then next 3 years for him to live.

I have about £35,000 in savings.

My daughter goes to university in 2 years time (more cost).

I can save like mad at the minute, but my job could end in the next year to 3 years, at which point it will be almost impossible to acheive the same earnings.

Should I pay off my mortgage? I am tempted to say yes, but it will leave us with nothing.

What do you think?

Sexy_Em

Invest Invest Invest!!!

pinky26

Hi, you are in a good position either way, but personally i would pay off the mortgage straight away, then pay what you were paying monthly into a high interest savings account that way you would be financially better off as you would just be earning interest, instead of earning interest on one account and paying interest on your mortgage, hope that makes sense!

If the worse was too happen and you lost your job your mortgage would be paid off, and your chiildren should be able to recieve some sort of financial help from the uni or lea

hope this helps

Sarahpuggy

Hiya,

Sorry i know this thread is about your mortgage, but having just graduated from uni i was wondering what the £20,000 was for?

I guess your son wont be getting a student loan? If he is eligible to get one, i would suggest he does..even if he doesn't use it and you pay for everything, it is at such a low interest rate that he can put it into a savings account and earn a higher rate of interest. At the end he could either pay it off in full and have earnt a bit, OR it could come in incredibly useful if/when he wanted to buy property.

I owe about £15/16k from being at uni for 4 years, i got a job straight away earning £16,000 a year and i pay £7 off a month. I just treat it like another tax. It would be worth considering..

sarah x

Shizaro

Hi,

Thanks to all. Food for thought.

In answer to the uni costs question :-

He has been advised by the uni NOT to get a job (too much work and he will fail)
Accomodation costs are around £3,800/Year, othercosts etc I calculate at about 40/week for books/socializing etc. Tuition fees are £3,000 per year - £27,900, and then I rounded this up for things like train journeys home etc.

I am working on the up-side here, I am hoping desperately that he will not cost this much in the long run.

Interest rates on loans are 3.2%, I can only get about 3% on interest (I am JUST in the high tax bracket (40%), this reduces even a 5% interest account to 3% i'm afraid).

Shizaro.

_s79

let him experience the real world, aldi food and a cheap flat wont kill him


I would pay off the mortgage and save what it would usually cost you (you wont miss it if you never had it).

Sarahpuggy

Yeah i kind of agree! It was great fun having to budget and it feels all part of the uni experience as everyone else is in the same situation! I knew i could always get help from my parents if i wanted which was very nice, but i really tried not to and felt it really has made me a better person and more realistic.

Also..nobody at university liked the people who got everything paid for by their parents!!! Its sad but true im afraid.

It would be good to give him an allowance every month perhaps.. or something along those lines.

Good luck anyway x

humfer

You won't need to spend that £20k to send your son to uni straight away so I would pay off the mortgage or if not about 90% of it to get it right down

jamesd

What is the housing market like where he will be studying? It might be better to use the money as deposit on a buy to let property there and let him take care of ensuring that the other student tenants in the shared property behave themselves.

Have him get the maximum possible amount in student loans, since that's cheaper than mortgage interest on your own property.

If you want to give him money you can do it more efficiently by him borrowing at 3.whatever percent and you continuing to save your mortgage interest by overpaying it. Once that's fully paid you can switch to paying off the loans he takes, if you want to.

My guess is that stopping overpaying on your mortgage and saving for a deposit on a second buy to let property for her to handle is a better idea. Assuming that property prices make this feasible. Or if your mortgage allows overpayment and drawdown, overpaying now and taking the money out when you need it for her.