Help - why do I want to be mortgage free?

escroooge

I see it simply whilst I have my mortgage I work :-

the 1st week of the month for the tax-man
the 2nd week of the month for the Banker
the 3rd week of the month for bills
and the 4th week of the month for me.

Over-paying the mortgage so that it is eliminated early can free up 1 week which:-
I can use to improve finances for my "grey years" or simply not work but enjoy "feet up, joyfully understanding that the banker gets nothing-more from me".

Dead_Eye_Jones

I guess im lucky in that the things I value in life arent associated with money, I really have no interest in luxury holidays, time spent with family and firends is always much more rewarding. On that basis paying off the mortgage is a real no brainer.

In your case perhaps you indeed need to focus on the long term savings in interest. This will be 10s of thousands and thats money most of us cant afford to throw away, maybe you can do everything you want to do and pay the mortgage each month for 20 years or whatever, but that extra money will be useful in your retirement, even just for keeping your house warm with the inevitable global shortage of fuel. If not that, then it could form a fund for your kids education, or maybe their first home.

For me I just love the idea of having a large disposable income. I remember the day I paid of my student loans, it was like getting an instant pay rise. Just imagine in only a few years time you'll have that boost in disposable income. And why limit yourself to holidays, perhaps do something a little more rewarding, engage in some charitable work, invest in something positive...

GL!

Optimizer

Cant even think of it so deceided to buy a virtual home at https://www.weblo.com/propery. Wont get to live in it but atleast its a start.

roswell

Tim_L There are many reasons why people will want to pay of the mortgage, These could be, Avoid tax on interest, ensure stability in home life incase of unemployment / illness.

By having large savings and low income with a high mortgage outlay you are at a much higher risk if you become to unemployed.

By having low / 0 savings but a fully paid off house you can get benifits from the goverment eg council tax reductions / mean tested benifits etc.

By having a income of 18 K , a mortgage of 70 K and savings of 50 K you woudl be at more financial risk that someone with 20 K mortgage 0 savings.

you also miss the point that with the debt paid off you fee up more income each month to save / invest. in my case a £135 monthly mortgage payment would be over £70 interest, so really i would only be putting £65 into my asset / investment (house) if this was paid off i would be able to put £135 into investments / savings. Surely its better to get £135 out of £135 thatn £65 out of £135 ???

jamesd

roswell, no, it's not better in pure money terms because you have to wait until the mortgage is paid off before you start doing it. That reduces the number of years at which you're compounding at the higher than mortgage investment or savings rate. It is better in risk avoidance and for many in peace of mind terms and for may people those are more than ample reasons to use a repayment mortgage and overpay as much as possible.

ixwood

Interesting stuff.

No idea who's right, but an offset mortgage would give you the best of both worlds wouldn't it? Overpay into that and don't pay interest on that much money, but you can get the cash when/if you need it?

donstermonster

Why pay it off? One word OPTIONS

It gives you the OPTION to do what you want to do .

There is a real difference between thinking " i wll do so and so when i have paid of my mortgage" to Well now I CAN do it as my mortgage is paid off will i do it or will i do something else?

All about options....

Franko43

Interesting thread guys and one which I struggled with for a long time. I,myself, overpaid the mortgage in full, took a shock and awe aproach to saving and nailed it completely. The rush of getting that final letter is a good one allright but now that I've done it and have had time to sit back and relax I think I'd change things differently. As a point here's what I intend to do for the future. Firstly! I'm going to buy a property in French Alps as a rental investment, 39 weeks of renting should cover the £70,000 mortgage a year. Plus its always somewhere for a 'cheap' holiday. Secondly - I'm going to invest a fixed sum every month in a good ISA and thirldly I'm going to dip my toe in the stock market with a £1000 investment over 3 companies in three different sectors. Up to now the money I had for the second and third options would have went into an overpayment but I won't be making any overpayments on this mortgage. My heart says no but my mind is a definite yes. All my wage will go into this option while DW's wages will keep the good ship sailing. We're not into fancy cars, holidays etc or any of the lifestyle crap. All the neighbours are running about in 2006 reg cars sitting up alongside my little 1996 Astra, makes them feel good no doubt but I feel better knowing I'm not wasting my money

Tryster

Great thread. Just to add my tuppence...

I've never been particularly good at saving, and whilst I'm taking steps to remedy this I see my reduced mortgage term as my way of saving.

I also have a distinctly personal reason for wanting to pay my mortgage off. My parents had their house repossessed (mostly due to their 'laid-back' attitude to money management, combined with a little bad luck). I don't want that to happen to my fledgling family, so it's a real driver for me.

Ideally I'd like to have done it earlier, but we wanted to live a little before we had children... We now have a beautiful 4 month old daughter and have the luxury of DW not having to go back to work, and will be mortgage free in at most 7 years (ideally less if we can manage it).

I've only recently found MSE, but you can bet your bottom dollar I'll be using all the tips I can get to initially pay of my mortgage, and then following that invest some of the income that frees up. After all the way things are going I'll probably end up having to find private school fees just to get DD a decent education!!

groatie_queen

You never know what's round the corner....

I'm thanking my lucky stars that I've reduced my mortgage to £11,000 by way of monthly overpayments. I'm having to go part-time for health reasons, and my wages will drop by 40%. I'm single, and if I hadn't overpaid the mortgage, I would have to sell up and move to something smaller - as it is, I can stay on and lessen the belt-tightening by taking in a lodger (tax-free income up to £4,200 p.a.).

I wish you and yours the best of health, but as John Lennon poignantly observed, life is what happens when we're making other plans.... it's all a question of balance, and covering as many of the bases as you can, and living a life you're happy with.