Why mortgage free?

Brallaqueen

My mortgage rate is higher than a savings account
I live alone and I want the security of an overpayment stash if life goes pear shaped
I also want the option to re-mortgage in a few years time to a BTL, and need to have good equity
Finally, my mum drummed it into me - despite 8 children, a useless husband and cr*ppy jobs, she always overpaid what she could and paid off her mortgage 12 years early.
It's a great feeling seeing debts reduce, I guess akin to watching savings grow

themull1

doctor-dee wrote: »

I've just come across this forum and can't help but wonder why everyone wants to be mortgage free so badly?

Sure, I can see it being a good feeling to be debt free and own your own home outright. 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? (Well I know it did because I did it myself and made far more than I would have saved by overpaying the mortgage).

I have now taken out a very sizeable mortgage. My theory being that house prices are depressed (sure they will probably go lower still short term), and also we are facing spiralling inflation which will reduce the 'real cost' of the mortgage going forwards.

This may have been asked and answered many times already so I apologise if that's the case. Just wondered what people's thoughts are on this and reasons for giving back the cheap money early.

My husband has just left me and our two kids, and im trying to take on our mortgage on part time wages and ctcredits. My mortgage rate is nearly 6% and unless i overpay loads in the first 6 years of taking it over(probably £460 a month), i wont be able to afford the house when the tax credits stop. Its not all about wanting to overpay, some people have to overpay, and a lot of the interest rates are much higher than yours because a lot of people took fixed rates two or three years ago. Some of us don't have the choice if we want to keep the family home for the kids.!

originator

My mortgage rate is also nearly 6% and i cannot see that as paying the banks back "cheap" money!

Aless

To the poster who said it is because MFW have not thought about the wider picture, please do not imply that we make the choices we do because we are too simple to know there are or consider other options.
Paying off the mortgage can be a very good financial decision for some people and less so for others, but peace of mind is something people attach a price too as well.
I have a very large mortgage which is now only large because I have been paying if off. I will have saved myself hundreds of thousands of pounds by my overpayments, enough to go out and get another large mortgage so I can buy a bigger house if I want.
I have an interest rate of just short of 5% so any return needs to beat that rate and the compounding effect. Over the long term, it can be hard to get that as an average.
I also invest in a few shares, my OH invests in some funds and our pensions are invested in funds. I do not mind risking some money on the stock market but I am not prepared to risk hundreds of thousands on the stock market. That is my risk positioning others may be prepared to take more risk. I realise that I won't become rich by paying off or at least down my mortgage but I won't become poor either.
The interest rates at the moment are artificially low and I can remember my parents with 14%, I could not pay my mortgage at rates of that level and if you have a large mortgage interest rate rises can soon increase your payments to something unmanageable. I want to ensure that I can always pay my mortgage, I consider that to be responsible.

Needhelpsaving

My reason is that when I was made redundant the first thing I thought of is 'how will I pay the mortgage' - I OP so that if it happens again, I have a reserve that I could borrow back if I was in trouble - I have enough for nearly 3 months with both of us out of work and 6 if it's only one of us.

If this proves not to be the case then hey - I own about 5 extra bricks!!!!! lol.

laurel7172

Because stuff happens. You never think it will happen to you, but sometimes it's your number that gets pulled from the hat.

Redundancy, bereavement, divorce, illness.

Since I paid off my mortgage, I've developed a condition that may or may not progress to long term illness. I've got a way to go before I can afford not to work (a long way), but it's a definite comfort to know that my home can't be taken away from me, whatever happens.

gallygirl

Jonbvn wrote: »

OP,

Good question.

IMHO, because many posters on here are very single minded about being MFW and have missed the big picture wrt their finances.

RosieTiger wrote: »

Without trying to be funny, I understand your view point, but don't understand why you offer the same advice to everyone who posts about their intention to pay their mortgage off.
This is a mortgage free wannabee board. I understand that there are a number of ways to go about this, but it isn't a "Using Investments To Gather a sum equal To My Mortgage Board"

Jonbvn as RT has said, this is a mortgage free board so that is obviously what the focus of threads is. However, many people on here are OPing mortgages only as one string to their bow. For example, I OP my mortgage by £1080 a month (yikes, that's a lot!) but I am paying around £500 into my pension (employer also pays), which I am actively managing, and also use ISA's etc and have BTL's. I post about those on other boards/websites. And although I talk of the balance on one mortgage being 17k, and I'm planning to pay it off this year, what I actually mean is the balance is 40k with 23k in savings which I count as netting off the balance. My mortgage rate is only 1.49% on that account so I would be silly to pay it off at the mo.

But as to why I OP the mortgage? Choices. Freedom. Security. And pure satisfaction & fun (who knew spreadsheets and daily interest could be so entertaining )

Sunnyday

We overpay our mortgage for many reasons.

Job security is not what it once was and having been in the position 3 times now where one of us worked for companies that have gone under it has always been a worry that we wouldn`t be able to pay the mortgage. We absolutely need to have some security.

We will have saved around 40 grand in interest by paying it off early - i`d rather have that in our pocket than that of the bank thank you very much!

When the mortgage has gone we will be able to save and choose freely what we do with the money, it won`t be earmarked for the bank every month.:j

It is an investment - a no risk investment into our future.

There are many more reasons most of which have already been mentioned, all are extremely good ones too.

SD

FATBALLZ

mbbetter wrote: »

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.

Good for you. Just because you got £50k of government subsidy that your kids won't get why should you help them out. You deserve better than the next generation. I'm also glad to see that so many of the older generation share your attitude.

kingster2069

For me it's about providing security for my family. We have a 8 month old daughter and I would hate to think all my years of hard work could be taken away from us, if I became ill or my business went to the wall.
Our offset account offers us a good savings rate and we're no paying much more than people of variable rates.
Money saved in our offset saving account means we can now cope with 12 months of no money or 12 months of 14% rates. This enables me to sleep at night a little easier.
Also it is possible to lose your money over night with shares, the government offers protection on my savings.