Mortgage Free - Why?

wotsthat

WGG1848 wrote: »

When I first took out a mortgage I was told
'Borrow as much as you can for as long as you can'.

Who told you that - your lender?

de1amo

İts an old adage that my sister used going back to the 60s--she now has a massive house and can easily downsize to fund her retrement--the more you have in the pot at one time the greater percentage increase you get on the bank's money--it does work!

JonnyBravo

For all those baffled by this post, the answer lies in the age of the poster.
He held a mortgage through some periods of very high inflation. Your debt is eroded by inflation. With inflation running well over 10% for long periods it certainly was in your favour to borrow as much as you can and let inflation do the majority of the work on the debt rather than busting your guts on it. (ie it would have halved in real terms in 4 or 5 years no matter what you paid).

This is far from the case for the last 20 years though OP.
With lower inflation your debt remains relatively far larger for far longer and the quickest way to reduce it (and the interest you pay on it) in real terms is to pay it back!

BaconandEggs

JonnyBravo wrote: »

For all those baffled by this post, the answer lies in the age of the poster.
He held a mortgage through some periods of very high inflation. Your debt is eroded by inflation. With inflation running well over 10% for long periods it certainly was in your favour to borrow as much as you can and let inflation do the majority of the work on the debt rather than busting your guts on it. (ie it would have halved in real terms in 4 or 5 years no matter what you paid).

This is far from the case for the last 20 years though OP.
With lower inflation your debt remains relatively far larger for far longer and the quickest way to reduce it (and the interest you pay on it) in real terms is to pay it back!

Yes - this makes sense if the OP lived through periods of high WAGE inflation. However, wages are largely stagnant and we are experiencing a period of inflation in the cost of "essentials" like food and fuel.

Therefore, the points made by other posters regarding, paying it off to avoid paying more interest and to be able to save more are even more pertinent.

de1amo

no inflation for 20 years--what do you think has happened to the price of the price of the house he has bought!--if he started in the 60s and kept scaling the property ladder he must be sitting on a real pile of equity!

dimbo61

Which he may still have a huge mortgage on! and now is still not a good time to sell
Asset rich and cash poor ?
I looked on "whatsthecost" website a few years ago I worked out that I could save £50,000 by overpaying my mortgage and clearing it in 10 years and not 25 so I have options in my 50,s
Work part time,long holidays, retire early or take a less demanding job
Cant do that with a £125,000 mortgage can you!

WGG1848

Hello de1amo, you are correct, the property is now worth a sensible £800,000.:beer:
I have been sensible in my borrowing for house purchase, the maximum my mortgage has been is £36,000.
I have used the availabilty of mortgages over the years, at times the rate has been as high as 13%.
My post is genuine as is my good fortune to live where I do.
I also cannot believe that fixed term mortgages are not popular.
To go to sleep at night not having to worry what might happen to your mortgage over night, must be welcoming.:j

sarahevie

This reminds me of my parents, who have similar values.

They also have never owed more than £22,000 on a mortgage. Their house which they bought 1980 will be worth considerably more now. How much? doesn't really matter it is still their 'family home'.

They paid their house off by 47 (the typical 25 year model).

They encouraged us with a long term fix (10 years) reminding of the interest rates in 13/15%. 5.99% is historically low etc etc etc, shame that they have fallen since we fixed.:eek::eek::eek:

JonnyBravo

BaconandEggs wrote: »

Yes - this makes sense if the OP lived through periods of high WAGE inflation. However, wages are largely stagnant and we are experiencing a period of inflation in the cost of "essentials" like food and fuel.

Therefore, the points made by other posters regarding, paying it off to avoid paying more interest and to be able to save more are even more pertinent.

Of course.
Although the "period of inflation" you speak of now is laughably weak compared to the inflation of the 70's.
Then, although wages were increasing, there was a great deal of pain each year before your wages played catch up. Some employers switched to smaller twice yearly increases to counter this to some small degree.
The fact wage inflation is running behind commodity inflation for a couple of years may take disposable income back a few years but we've still got it good!

WGG1848 wrote: »

I have been sensible in my borrowing for house purchase, the maximum my mortgage has been is £36,000.
I have used the availabilty of mortgages over the years, at times the rate has been as high as 13%.
My post is genuine as is my good fortune to live where I do.

It looks like you haven't lived by the mantra to the maximum then?
Not quite convinced enough to follow it?

diable

WGG1848 wrote: »

Hello de1amo, you are correct, the property is now worth a sensible £800,000.:beer:
I have been sensible in my borrowing for house purchase, the maximum my mortgage has been is £36,000.
I have used the availabilty of mortgages over the years, at times the rate has been as high as 13%.
My post is genuine as is my good fortune to live where I do.
I also cannot believe that fixed term mortgages are not popular.
To go to sleep at night not having to worry what might happen to your mortgage over night, must be welcoming.:j

A value of £800k is only good if in retirement you want to down grade and put money aside unless you are someone who has a decent pension plan.