Why mortgage free?

pawlala

doctor-dee wrote: »

But given such low mortgage interest rates over the last 18-24 months and a recovering stock market it surely made more sense to re-direct spare cash into investments?

Are you saying that property is not an investment?

Danni-R

For me as a FTB its about seeing the end in site. One day I'd like to have to children and want them to have a better life than I did. If I can shave off 7 to 10 years off my mortgage then I can put them through Uni etc. Its security and knowing that you'll be able to provide for your sprogs.

Also as others have said. Whats the point of amassing lots of savings when you're paying more interest on a debt.

GEEGEE8

I don't have a mortgage, so my post may not be valid.. I used to be a mortgage advisor though

I really do think that for *some* people, overpaying on the mortgage is a simple way of saving their money. I have no idea how stocks works, shares etc.. I don't want to invest and wouldn't know how to.. but overpaying the mortgage is such a simple way of doing things, especially if you have a family and busy life.. and unlike shares and investments it's very transparent as you can just see your mortgage balance going down year by year.. you can also calculate how much you could save in interest over a certain amount of time which is very attractive to see.

Share, savings etc aren't as exciting and it can be hard for people to work out what they are actually going to gain in the long term. Paying off the mortgage shows an obvious gain, their own home owned outright and the security that brings with it.

Can't wait to get a mortgage one day so I can start overpaying it ! lol

dimbo61

Do you read the news about the big payouts to city bankers ! Why pay out millions on bonuses to the bankers who deal in shares ? Because they always win on the stock market both when buying and selling .
So shares can make you money but being mortgage free is my first goal.

Engeroosi

I like this question and point raised, I would like to know how much the OP has profited in shares and how much he risked losing? I could put 1k in my mortgage or put 1k on my football team winning at even odds, But I would rather know for a fact i still have my 1k plus the interest it saves me having to pay for the next 25 years than risk 1k to win 2k which I might lose on the next game.

Mister_aaa

Because my house isn't an investment, it's my home.

property.advert

Danni-R wrote: »

For me as a FTB its about seeing the end in site. One day I'd like to have to children and want them to have a better life than I did. If I can shave off 7 to 10 years off my mortgage then I can put them through Uni etc. Its security and knowing that you'll be able to provide for your sprogs.

Also as others have said. Whats the point of amassing lots of savings when you're paying more interest on a debt.

Whilst I do not totally agree with your argument, it does have new validity in an era of massive university tuition fees.

Back in 1990, the government signalled that people would have to take out loans for university or parents save their but in the intervening 20 years, most parents have squandered their money down the pub or on junk food or fed their addiction to cars, flat screen TVs and the latest mobile phones rather than put something away for their children's education. Now they bleat about a rise in university fees.

So getting rid of a mortgage is one way parents can free up cash to pay for university fees. That is probably not why they are doing it but that will be the reality for some, though the rest will always want to spend now and have the state to bail them out as usual.

mbbetter

If you can get in and out of the stock market in the short term with a profit then very good for you. In hindsight I could have made a packet out of shares and I know many people that have made a huge return on investment in recent years. However on the flip side be mindful that over the long term a good average return on shares may be just over 5% (http://www.fool.co.uk/Investing/guides/Why-Shares-Are-Best.aspx). I have also first hand experience of people delaying retirement by 5-10 years because of the banking crash and their RBS (dead cert) shares being effectively wiped out. (some may argue poor portfolio management).

I'm no expert on how spiralling inflation will affect the real cost of the mortgage. I do know in a lot of situations employers are unlikely to match pay rises with the spiraling inflation.

Danni-R

Property.advert. The uni thing was an example. I think that the prices that they are going now I'll probably have to remortgage to send them (side note, I dont even have kids yet!) but its just knowing that I will be able to provide for them one day. That also includes them knowing that they arent going to be moved around etc.

Its a long way off yet but I see it as a way to save money for the future and know I'll have options open to me that I might not be able to do one day.

mbbetter

Just expressing my opinion but my kids can pay for themselves through university.

Seeing that I funded my my own way through university, I don't see why I should also fund theirs. If they want to go to uni (and I think they should) they should see it as an investment, much like I was forced to (rather than some boozy rite of passage to move out of home). Hopefully this would also make them think before choosing some mickey mouse course.