DON'T Pay Your Mortgage Off Early!!!

InMyDreams

IFA wrote: »

Pay off your mortgage then save the money you'd normally spend on the mortgage and then die early with lots of money

Well I suppose that at least if you die early then you'll save yourself from paying all that income tax you'd otherwise be paying due to starting your savings from scratch and saving too quickly after the mortgage is paid.

Argh.. I was so NOT going to post on this thread :rolleyes:

keeperbear

getmore4less wrote: »

Paying of the mortgage is a good thing to do and a no risk option but should not be done without considering the longer term.

A good post. However, I think most people pay off their mortgage with the long term in mind. If you are mortgage free, you are effectively planning for rent-free retirement.

getmore4less

A good post. However, I think most people pay off their mortgage with the long term in mind. If you are mortgage free, you are effectively planning for rent-free retirement.

Thanks,

but rent free is only part of the equation allthough a significant one there are other ways to acheive that goal and be much more tax efficient.

The other thing I forgot were those that build in the "downsize" they too can find themselves with a large lump sum that generates income that is not protected from tax.

So a downsizer with pension lump sum they could have a few £100K that needs investing and they will have little or no experience of how to do this.

By starting early you can build up some alternatives that are protected from TAX in ISA's and most importantly gain some experience with the smaller amounts before the big ones turn up.

Jonbvn

IMHO, tax on your savings/investments is definitely the deciding factor in this issue.

smudgemanc26

Just been reading this thread with interest and am slightly confused to say the least!

I dont really understand all things financially but hoping to do the right thing in the future so wanted some advice.

Im 26 and have had a mortgage for 4 years I live in a small property which has increased in value. I added some additional borrowing onto the mortgage from my mortgage company to pay off some debts and do home improvements.

The thing is now hopefully i will get a voluntary severance payout from work once i have cleared my exisiting debts loan and credit card i will have money left over. I was thinking about paying some of this money towards my mortgage but after reading a few posts on here that doesnt seem like the best thing to do.

I have a pension at work which my employer contributes to and hope to continue this if i can as i have had this since i was 21.

Currently dont have any savings a such by have the necessary life insurance incase anything happens to me.

What shall i do with the excess money do you think it would be a good investment to put this into a ISA and keep it for a rainy day or emergency or leave it growing interest until hopefully in the furture i meet someone get a joint mortgage and move into a bigger house and put this down as a deposit or just keep it for when i retire (in a good few years to come i hope!)

Any advice would be great from all you posters who are in the know.

Thanks

Dithering_Dad

I would always advise that everyone should have at least 3 months worth of their outgoings (mortage, food, bills, car costs, etc) saved in an easy to get at place. Cash ISAs or Mortgage Offsets are ideal for this because in an emergency they're easy to get at, but not too easy if you know what I mean (i.e. for that gadget purchase).

Once you've done this, then you can decide if paying down your mortgage or investing the money instead is for you.

smudgemanc26

Dithering_Dad wrote: »

I would always advise that everyone should have at least 3 months worth of their outgoings (mortage, food, bills, car costs, etc) saved in an easy to get at place. Cash ISAs or Mortgage Offsets are ideal for this because in an emergency they're easy to get at, but not too easy if you know what I mean (i.e. for that gadget purchase).

Once you've done this, then you can decide if paying down your mortgage or investing the money instead is for you.

Well i know that wont be a problem i was thinking about putting some extra cash into my online savings account i have now which is offering a good rate.

The thing is i know i cant keep the money i have left over in the bank and personally wouldnt want to because i hate the bank and they are not paying me a piddly amount of interest to have my money in one of their accounts!

Dithering_Dad

have a look at NS&I Direct cash ISAs, they have a good rate and the money is relatively easy/hard to get at. http://www.nsandi.com/

smudgemanc26

Dithering_Dad wrote: »

have a look at NS&I Direct cash ISAs, they have a good rate and the money is relatively easy/hard to get at. http://www.nsandi.com/

Thanks for your help

Just had a scan of the website my is it confusing! I dont know what to do for the best.

So is the nsandi place to save better than the curent deals on ISA such as and ING direct and the other ones at 6%?

Jonbvn

More on the NS&I Direct ISA here.

At the moment this ISA is the best mini cash ISA @6.3% clear. It is guaranteed to be 0.55% above base rate until April 2008. You will find slightly higher rates elsewhere. However, when you look at the details, they have some restrictive T&C's.