Pay off mortgage or invest?

angelicmandy

Hi all,

my partner and I are currently in the position of inheriting about £50k following the loss of a family member. We currently owe £70k on our mortgage and have about £35k in savings between us. I have a fulltime job but my partner has recently been made redundant. We are wondering if it is a good idea to either try & pay off our mortgage altogether or whether to pay part of it off & try & bring it down to about £20K? or is it best to invest the money in some other way? If we only pay part off & are left with only owing a small amount is it best to have a short fixed remortgage or a longer term one that is very small payments per month. We are currently on our lender's variable rate paying about £360 a month after our fixed rate came to an end earlier this year.

Many thanks for any help/ideas :A

mummyofonechild

If it were me I would reduce it down to say £10/15K and then when your partner gets another job then use the rest to pay it off. At least you will have some spare cash in case you need it now.

CLAPTON

you owe 70k on the mortgage
you have 35 + 50 = 85k in cash

assuming you have no other debt then I'ld pay off the mortgage... its a lovely feeling to owe nothing
you still have 15k in cash and you will no longer be paying the mortgage so you can either save that money or use that to get by until OH gets a new job; just try not to spend the 15k

originalmiscellany

you're wanting money acecssible, couldn't you get an offset mortgage?
Minimum is 30k, but you could then offset your savings, which would effectively mean a tiny mortgage, but if times get bad, you would have the opportunity to tap into your inheritance?

Jonbvn

To decide on the best approach, you need to tell us the mortgage interest rate.

BTW, if you or your partner are claiming any benefits then you have to be careful that you do not fall foul of "deprivation of assets".

dimbo61

This is the Mortgage Free board and it does what it says on the tin IE Be Mortgage Free!
Now we dont know if you can afford to pay the bills on your income alone but with £85K sitting in a bank account earning what 1/2% before TAX and you paying 2.5/4.5% on your mortgage I would clear the mortgage ASAP and have £15K left.
That way if you lost your job as well then you have less than £16K in savings and get benefits!!!
For most people the biggest bill each month is the mortgage and you can live much cheaper without it! Only my views GOOD LUCK

angelicmandy

Thanks for all the posts guys, food for thought there. I think, without the paperwork in front of me at the moment, our interest rate is currently between 2.5 & 3% but obviously we understand on a variable this could change at any time.

I have been wondering too that if we did pay the mortgage off, what should we do about the insurance policy we have that covers the mortgage being paid off if either of us passes away. We are paying £15 per month for that

Primrose

My own reaction would be to either pay much of the mortgage off but still keep a reasonable sum in savings for emergencies until your OH gets another job. I think we're in for rocky times ahead and the less debt one has, the less financial pressure on you. Regarding your mortgage insurance , I would contact the insurers and ask what the situation would be if you reduced the mortgage or paid it off as I presume the cover would have been for a set amount. If you reduced the mortgage you might find that the residue of the debt would be paid off and any balance paid in cash to the surviver, but every policy is different. If you pay the mortgage off, you would then need to check whether it was worth continuing to pay the policy or whether you could get cheaper life cover elsewhere.