if you move but still owe money on house (but have it in the bank)

moneyinmypocket

deleted by myself

CLAPTON

makes no sense
as you don't know how much you will get for the current house
and you haven't said what price house you plan to buy
or what your selling and buying costs are

moneyinmypocket

del by myself

McKneff

Pay it all, you then have a house that you own, no mortgage, no debt, sound like a no brianer to me.

LilacPixie

Depends on lots of things.. any other debt? mortgage interest rate? net savings rate? penalties for paying off? There is no right or wrong answer,it all dpends on individual circumstances.

treliac

moneyinmypocket wrote: »

ok i will try and explain situation a bit better

Lets say you owe 100k on the house and one day 100k drops into your bank account and you then think right id like to pay off the morgage however in a few years id like to move to a bigger house (lets say 200k) - is it always better to pay off the morgage even if you dont see your self staying long term/med term

Why not pay off the mortgage and then save what you are no longer having to pay monthly? It doesn't make sense to pay mortgage interest if you have no need to. If you invest the 100k you will never make enough to make that a better option.

But take into consideration any early redemption penalty too. Why would you sell the house before you are ready to buy another? You would then have the cost of renting somewhere.

Generali

moneyinmypocket wrote: »

lets say you buy a house 150k, you still owe 100k but have 100k in the bank and you want to move house.

Do you sell house, hopefully clearing the debt and walking away with the money you put in THEN add it to the 100k in the bank to get a new place

or

do you use the 100k to pay off the house then sell up taking the money sold to then buy next place

(please only choose 1 of these options, i know there could be a option of renting first one out and buying next using 100k dep)

I'd hope that, given current record low interest rates, that I could earn more by investing the money than I could in paying off the mortgage.

Having said that, paying off the mortgage is the low risk option.

It really depends on your attitude to risk.

RenovationMan

A windfall like £100k dropping into your lap, should be used wisely. I'm assuming that your test guy has a job and would have quietly continued along financially without the £100k and so would have paid off the mortgage eventually anyway? If this is the case, he needs to think about his lifelong financial security.

Does your example guy have additional savings other than the £100k, does he have a pension plan in place that is on target to hit the levels required for a comfortable retirement?

There is no real security in putting all of your savings into an illiquid asset, leaving none for emergencies and property maintenance. There is no security in paying off a house and then struggling along in old age poverty due to lack of pension savings.

The best thing to do with a financial windfall is to look long-term, not short. An holistic approach with finances is always the best one.

Loopgames

I would agree with the idea to pay off your debts. It would be absurd to think of your future when your present situation is debt ridden.

It has become so normal to have debts that people think 'extra' cash is bonus and treat it that way as if it's a luxury. It's become 'absurd' to pay debts when paying off debts makes 'freer' in many ways such as choosing to do what you want to do rather than what you HAVE to do

e.g. I have to work to make my mortgage payments vs. I want to work to save for a bigger house. The mentality is different and the latter is less stressful especially if there comes a time when your job is at risk.

quantic

Paying off the mortgage is the way to go.

Cleaver

Loopgames wrote: »

I would agree with the idea to pay off your debts. It would be absurd to think of your future when your present situation is debt ridden.

Why is it absurd to invest or save money to generate a higher return than paying off your mortgage would save? In the longer term you could therefore pay off more of your mortgage.

Generali and LilacPixie have alreay said that there is no right or wrong answer to this question and it depends on so many factors. Age, risk profile, job status, life goals, investment goals etc. etc. It's funny how a lot of people have the 'YOU MUST PAY ALL DEBT IMEDIATELY AS THAT'S WHY WE'RE IN THIS CRISIS!' mentality. It could lose you money over the long term.