Early-retirement wannabe

Anonymous101

I think that there's a point where the paying off of the mortgage is more beneficial than investing but its not always.

For example your LTV is still quite high or you're early into a fairly large mortgage. Here I think its worth reducing the capitial in order to get a better deal in the future. Especially if rates are to rise which they must do at some point. Obviously you could invest until the likely rise and then overpay but its worth thinking about maximum overpayments etc.

Once the LTV is in good shape then I agree that it can be much better to invest than pay off the mortgage.

atush

gfplux wrote: »

I have said this before on this thread but I think it is worth repeating.

Paying off the mortgage does tie up the cash and it is less liquid.
However
DO NOT Underestimate the feeling of freedom living in a home without a mortgage gives you. I certainly felt so many more choices opened up.

Very true BUT you dont have to do one thing with spare cash. You can overpay a bit, add a bit to pension AND save some.

We overpaid (even with a 1% mtg) because we wanted to shorten the term so the OH could retire earlyish ie before 65.

but I find having a mtg of just over 5K easy enough to live with lol.

atush

We are spending too much

Herein lays your problem. Do an SOA (here or debt free board) and also do a spending diary. Be religious and write down every pound or even 50p you spend. Even a coffee or parking.

I would be flabbergasted if you didnt find waste to eliminate, or ways to cut back on outgoings like ins, phone, utilities, take outs etc.

All this could go into your savings/overpayments/pension

Anonymous101

atush wrote: »

Herein lays your problem. Do an SOA (here or debt free board) and also do a spending diary. Be religious and write down every pound or even 50p you spend. Even a coffee or parking.

I would be flabbergasted if you didnt find waste to eliminate, or ways to cut back on outgoings like ins, phone, utilities, take outs etc.

All this could go into your savings/overpayments/pension

I'd second this. I did this years ago and found it really useful.
Once you understand what you're costs are its easy identify obvious waste and to categorise them into "essentials" and "discretionary" spending. Then you can get to the task of eliminating less obvious waste.

bugslet

atush wrote: »

Very true BUT you dont have to do one thing with spare cash. You can overpay a bit, add a bit to pension AND save some.

.

That's been my strategy, overpay a bit of mortgage, shunt some into a pension and keep a bit of savings.

I've not saved as much as some as savings were an impossibility at one point and I tend to view my business as the savings.

I'm doing the houe and garden up after years of neglect, i don't want to keep a spending diary at the minute:eek:

Anonymous101

bugslet wrote: »

That's been my strategy, overpay a bit of mortgage, shunt some into a pension and keep a bit of savings.

I've not saved as much as some as savings were an impossibility at one point and I tend to view my business as the savings.

I'm doing the houe and garden up after years of neglect, i don't want to keep a spending diary at the minute:eek:

:money::money::money:

Good to understand what you're "investing" in the house.

Marine_life

Whether paying off a mortgage is a good thing or not depends on a lot of things and there isn't a single right or wrong answer. It certainly shouldn’t be seen as simply the spread between the mortgage rate and the potential investment return. Tax also needs to be considered.

Overall need to look at the portfolio effect and attitude to risk. Most investors will have a balanced portfolio which consists of a cross section of assets across the risk spectrum with some higher risk (growth) assets (e.g. equities) and some lower risk safe assets (e.g. cash deposits).

Depending on that mix it may make sense to pay off some of the mortgage e.g. as a replacement for some of the lower risk invested assets (although that would depend on whether the individual already has the appropriate emergency fund or short term cash availability).

OldMusicGuy

Just to add to this thread, I am retiring February 2018 aged 60. Was driven to it by pressure of work and also deteriorating personal relationship with my wife (I was acting the corporate wonk at home). Also, our son has just finished Uni so that relieves some of the financial pressure. On the surface, our monthly post tax income will drop by about 70%. But we should be fine as we will be changing our lifestyle significantly (downsizing and living more sustainably).

Main concern is that it can't come a day too soon. Now I have decided to go, every day at work is painful!

OldBeanz

You can save £60k across three 123 Accounts with Santander earning more than 1% along with smaller amounts in numerous other current accounts. Why pay your mortgage off when you can earn more risk free?

bugslet

OldBeanz wrote: »

You can save £60k across three 123 Accounts with Santander earning more than 1% along with smaller amounts in numerous other current accounts. Why pay your mortgage off when you can earn more risk free?

In my case, I had a parent that went bankrupt and lost the house we were living in. I ended up buying it to keep a roof over our heads. That has probably skewed my perspective somewhat!:)