Strange mortgage thought

Mattd

So, I'm 36, I own a £300k property, I have £60k left on the mortgage, and I have £60k in savings.

Currently my mortgage is a intrest only and I'm paying around £130 per month.

Here's my thought...

Given that iv got the money, should I pay it off? I ask because It occurred to me that with £60k savings I could essentially continue to pay the mortgage for another 26 years.

Are there any situations when not paying of the mortgage makes financial sence?

opinions4u

What is the rate on the mortgage?

What rate can you get on the savings, after tax?

silvercar

Mattd wrote: »

So, I'm 36, I own a £300k property, I have £60k left on the mortgage, and I have £60k in savings.

Currently my mortgage is a intrest only and I'm paying around £130 per month.

Here's my thought...

Given that iv got the money, should I pay it off? I ask because It occurred to me that with £60k savings I could essentially continue to pay the mortgage for another 26 years.

Are there any situations when not paying of the mortgage makes financial sence?

You need a rainy day pot. Who knows what you may need the money for?

globalds

How do you intend to pay it off eventually ?

holly_hobby

Well of course the lender is charging you interest each month and year on the os mortgage amount.

Best Advice is always to reduce debts, as you will normally be charged more on a debt than you will ever achieve on any investment or savings account.

However, we are in strange times .... with historically low mortgage interest rates ... which has thown that on its head slightly ...

If I were in your position, I would establish which investment/savings vehicles that net of tax (always use your ISA allowance if you are a tax payer), gave me a larger return than I am being charged mortgage interest, and meet my risk profile and requirements.

I would choose accounts that have short to medium (i,e 90 day) notice periods, in order that if my mge interest was due to exceed that which I was receiving on my investment - I could choose (after retaining sufficient emergency fund) to reduce my borrowings, and chargeable interest.

However, it depends on the individual - some would rather have little or no debt regardless of any investment return that may be made.

Only you can really decide .... you are young at 36 to be in such a favourable position .. so do remember (unless its a flexible/open mge account) that once capital is paid off your mortgage, should you wish to "withdraw" it, it would be classed as a further advance .... and subject to normal underwriting criteria and processes. So do consider this when electing to repay or make lump sum repayments - only you know your financial position and what you want to achieve.

Hope this helps

Holly

Evilm

Well I would be surprised if you were earning £130+ a month on the savings.

To be honest what I would do (as long as no early repayment penalties are in place) is pay off about £40k and leave £20k in savings. This would give you a "rainy day" fund for emergencies but cut your mortgage payment every month to about £45 a month. Once you've saved up a bit more then you can pay off the rest.

Wickedkitten

If you are 36, and have 60k in savings and it's an interest only mortgage, you should switch to repayment and see if you can't start getting the capital paid off.