Should I spend all my savings on paying my house off?

DDBA

Ok so me and the wife only owe about 25k on our house and we could afford to pay the whole thing off in one go. However this would almost totally wipe out our savings. The thing is, our mortgage payments are very low as they are and hardly put an dent in our combined monthly income. I know paying the house off outright now would work out a lot cheaper in the long run, but I don't fancy the idea of just blowing all our savings on it in one go. As I say, our monthly morgage payments are so low that they don't eat into our quality of life one little bit.

What would you do?

fair_enough

You say mortgage is low - is the interest rate lower than you can earn on the money in savings? Is there a fee for paying off early?

Most would say keep 3-6 months of earnings in savings for rainy day.

Good luck with what you do.

redped

How about making overpayments each month on your mortgage? It'll obviously greatly reduce the time to pay off the mortgage, but will still leave you with savings if needed.

dunstonh

What is your overall financial position? Do you have investments for the medium and long term? Retirement planning doing what you want?

Mortgage is generally considered the only debt that doesnt necessarily have to be paid off to save and invest for the future as its generally low cost debt.

If you plough too much into the mortgage, are you leaving yourself short in other areas? - in this case you say savings but what about medium and long term money as well?

opinions4u

What rate are you paying on the debt?

atush

I personaly would never 'wipe out savings' to pay off a mtg. AS you would have to borrow at a much higher cost in an emergency- and it would take time.

If your mtg is so low and insignificant now, how much are you saving each month? Where? Do you have other debt? Pension?

We need to know more to give the best advice.

Ximian

What about early repayment charges for the mortgage, if so, what is the percentage?

Mr_K

I was in a similar situation a few years ago, decided to pay the mortgage off. Never regretted it. The interest saved has already amounted to a significant amount and my mortgage money is going straight into savings/investments.

You do need some savings for emergencies though, how about just paying a chunk of it off ?

dunstonh

I was in a similar situation a few years ago, decided to pay the mortgage off. Never regretted it. The interest saved has already amounted to a significant amount and my mortgage money is going straight into savings/investments.

I'm in a similar situation and I am doing a bit of everything. S&S ISAs, Pension and paying extra on the mortgage.

Hughesy84

How much is the mortgage payment? What % do you pay a year?

And also how much a month do you save?

thenudeone

If your mortgage rate is lower than the after tax return you could receive from your savings, it's a no-brainer. Keep the savings and make some free money at the banks' expense! Just like they've done to us over the decades.

Otherwise it's more difficult, because although you would probably be financially better off by paying off the mortgage (depending on any early repayment penalties), that would not be advisable if it removed all of your safety net of savings to fall back on in an emergency (unless it's an offset mortgage where you could withdraw the overpayment if necessary).

So - quite a few factors to take into account.