when to pay off?

annedorst

Hi there, I have an offset mortgage and am 2 payments from paying off my mortgage. However need help...when do I do it? If I have the same amount that I owe on my mortgage in my account do they stop taking my payment? or do I need to formally request a valuation and then pay off? I see that you recommend having 3-6 months savings in addition to paying off, should I not pay off until I have this as well? Or should I pay off as much as I can minus the 6 months savings and keep on paying my monthly? there is no limit or fee on overpayments on my mortgage. Lots of questions, appreciate any help excited to almost be there!

Sepa74

Hi Anne,

If you have more money in your offset account than you owe on the mortgage, you are paying no interest on your mortgage, but you will still owe the money, so am pretty sure the bank will continue to take the payments, but you should probably check with them to be certain.

I would definitely recommend building up 3 - 6 months savings before you actually pay off the mortgage, and if you are thinking of moving in the future and your offset is portable, then you might consider not paying it off at all but just keeping enough money in the offset savings account to ensure that you are paying no interest - this would mean you could keep your existing mortgage when you move rather than having to apply for a new one with all the associated fees. However you would have to weight the pros and cons carefully, of course.

If you do decide to keep the mortgage open, make sure that you don't let the savings go over the amount you owe on the mortgage, as otherwise you will be earning 0% interest on your savings, which isn't very MS! You should really start a cash ISA to take advantage of the tax free savings and as somewhere to put your emergency fund.

Once your emergency fund is built up, you will need to work out how best to invest all your spare money! There are savings and investment boards on this website that will have loads of advice for you, and you could also consider going to an Independent Financial Advisor to see what they recommend.

I hope this helps. Congratulations on becoming debt free! That's fantastic, and I have to confess I am more than a little jealous!

annedorst

that's great advice, really appreciated! will look into some cash isas now.
keep going you can do it :-) I was a rubbish saver until a friend of mine told me to aim for something that I truly wanted ...made all the difference to have a goal

albionrovers

As above. I don't get the paying-it-off in full bit? My mortgage is all offset apart from £500 so I will be paying a couple of quid per month for the next 15 years, basically as rent for my title deeds resisiding in the bank's vault. Not to mention having access to the offset balance any time I may need it, should I ever fall on hard times.