Should I pay off my mortgage? Discussion area

OutAbroad

May I ask the payoff question from a slightly different angle? We are in the fortunate position of living abroad for a couple of years and renting our house out. We can offset costs e.g. mortgage interest against tax. In this situation is it worth paying off the mortgage; or saving in a parallel scheme - though there does not seem much on the market - in order to keep the mortgage interest route open?

Grateful for any views.

craigmx5

Hi

Just got a large inheritance and also have an outstanding tracker mortgage at base +0.9% (1.44%) My outstanding balance is £62000 with no limit to over payments or redemption fees. Do I over pay £1000 per month and invest the rest for the interest and then the same for the next 4 years or do I pay off all the outstanding balance now. I have no other debt.

I cant decide what to do for the best.

Any advice would be great.

Thanks

Craig

rachelonna

Craig, I think it depends on what stage in your life you are at. You are very luck to have a very good mortgage deal. If you felt that you are unlikely to ever borrow money ever again, then definitely invest it (bearing in mind you may lose the money invested), and just overpay the mortgage to a level you're happy with

Otherwise, if you feel it's possible you will borrow - what if you needed to repair your roof for example, or any other similar emergencies - then you could possibly wipe out any gains from repaying off the balance.

So if you have enough savings for life's emergency, and feel you are unlikely to borrow again, then I would wipe out most of the balance, and invest the rest - ISAs first, then possibly ISA Shares - tracker or self invested based on what you preferred, and the rest in pension, and/or general stocks

Hope that helps.

bugrud

Help - I,m brand new to this and have a fairly simple question - I'm out of any "penalty" phase with my mortgage and about to be made redundant - question should i use my cash to approach my mortgage company to make an offer to pay off my mortgage in one fell swoop - and should i offer less than i owe -say its £75K -what percentage of what i owe should i be offering ? ( if indeed they will even listen ) i would really appreciate some advice and wonder what do all you experts think ? i really would appreciate your help - i'm 56 and unlikely to get a job so dont want this hanging over me - i could manage on my pension ( just ) so its about reducing monthly outgoings - i just wonder ?

lexington013

Sorry to here about your redundancy, im sure its worth approaching your mortgage company and seeing if they are prepared to listen. Im sure someone will come along with some tangible evidence of this occurring. I would say offer 15% less, suppose it depends on what interest was outstanding? Best of luck anyway.
Dont give up on finding some part time work, lots of employers would be glad to have your life skills (and generally) reliability......

cornjolly

Hi folks- newbie here but think i'm doing it right.

I have 2 mortgages both with approx 6 years to run.

Mortgage 1 - Repayment at 2.5% - balance £24000
Mortgage 2 - Interest Only at 2.5% - balance £59000

I have a cash saving after using annual ISA savings of £24000

Mortgage 2 will use an endowment (sorry but some of us still have them) to pay it off. It is still on track to pay in full.

Question - Do I pay off mortgage 1 completely - or -
part pay off mortgage 2 ?

Thank you for your patience and look forward to responses.

CHornsey

Hi All,

I looking for some advice on the best course of action:

I have a mortgage on my home which is jointly owned with my partner.

I have just inherited some money which I could use to pay off part of the mortgage. We're currently on a fixed deal so I would use half the money this year and put the rest into an isa until next year.

According to Martin's calculator this would save us £17k over the life of the mortgage and would take us below 60% LTV in case we remortgage next year.

However, our mortgage rate is only 3.9% and I am a lower rate tax payer. If I put the money into a long term fixed account or a stocks and shares isa would this be better? This also means the house would still be 50:50 split between my partner and I.

The other option, is to combine the money with a friend and buy a rental property. Together we could buy a cheap flat outright without the mortgage and this would be a long term investment. The property I'm looking at would conservatively make £4000pa net profit since we wouldn't be paying a mortgage, plus we would benefit from any property increases.

What would be the best way to use the money to get the best return in the long term?

I would appreciate any thoughts.

Many thanks

Sepa74

@cornjolly

It's 6 of one and half a dozen of the other as both are at the same interest rate.

BUT the interest rates are quite low, so if you hunt around you will probably find a savings rate that will at least match that figure.

I would give some consideration to building up your ISA savings over the next six years (or until your mortgage rates are higher than savings rates) because ISAs form a nice tax free income stream which is very handy after retirement.

Sepa74

@CHornsey

Hi there, if you can find a savings account that brings in the equivalent of your mortgage interest than that is certainly a possibility and keeps things even with your partner.

If you do decide to invest in a btl, then remember you will have to pay tax on the income earned - would this push you into the higher tax bracket? Most IFAs would recommend that you borrow to purchase the btl as you can deduct the interest you pay on the mortgage from the income and pay less tax as a result.

Colp

I have a low cost endowment mortgage of £29,000 is it worth paying it off as we have a short fall of at least £8000 as it has at least 6 years to run.