What did you do the day you made your final morgage repayment

chewmylegoff

moneyinmypocket wrote: »

A friend of mine at work made his last payment and has now booked a holiday abroad - he said to me he is home and dry which made me think. What did you do to celebrate paying off your morgage or what would you do when you do

To celebrate, I created a Sockpuppet account on an irrelevant Internet forum and wasted hours of my time pointlessly trying to wind people up. :beer:

setmefree2

moneyinmypocket wrote: »

A friend of mine at work made his last payment and has now booked a holiday abroad - he said to me he is home and dry which made me think. What did you do to celebrate paying off your morgage or what would you do when you do

We are about to make our last payment on the 22nd (£250k cleared in 9 years :j everyone should join the MFW board imho)

We will
a)drink champagne
b)sit around feeling brilliant as will be £2500 better off per month
c)just enjoy the wonderful feeling of freedom and achievement


Happy Days!

setmefree2

Loughton_Monkey wrote: »

At risk (certainty) of boring everyone, I will repeat my rant about this not being a cause of celebration.

You never mentioned the tax on your savings - changes the whole dynamic especially if you are higher rate tax payer.

RenovationMan

PasturesNew wrote: »

I moved out .... couldn't afford to run or maintain the house, so sold it and moved out

Something a lot of the MFW people seem to forget. All their efforts seem to be invested in paying off their mortgages with no thought towards how they will fund their retirement. Yes, a mortgage free house is a cornerstone of a comfortable retirement, but it's not necessary to pay it off in your 40s.

The ideal financial plan would be to pay the mortgage off on the day you retire, having spent all your working life building up a decent pension pot.

I'm in my early 40s with a mortgage size that would have most people's bums twitching, yet my pensions are of such magnitude that I could pay nothing more into them and still have a retirement income above £20k.

I can always sell up and buy a smaller house, an easy way to become mortgage free. Much harder to remedy a small or non existent pension pot.

RenovationMan

setmefree2 wrote: »

You never mentioned the tax on your savings - changes the whole dynamic especially if you are higher rate tax payer.

There is no tax on offset mortgages. The 'return' on the savings is a reduction in the monthly mortgage payments. As well as offsetting his mortgage a person can put money into ISAs, NSANDI (when available) and pensions which are also devoid of taxation.

As you close in on retirement the money in the offset could be funnelled into ISAs and the house paid off using a combination of the 25% tax free pension lump sum and the remaining offset account balance.

Using this strategy a pensioner is reducing his tax liability (tax is not paid on ISA returns and using the 25% lump sum reduces the monthly pension payment which is taxable) and it also means that the taxman has helped pay off the mortgage via the 20%/40% tax rebate in the pension plan. SOmething to seriously consider for higher rate tax payers.

wotsthat

setmefree2 wrote: »

You never mentioned the tax on your savings - changes the whole dynamic especially if you are higher rate tax payer.

Use an ISA. Nationwide are charging me 2.5% for my mortgage and paying me 4.25% in my ISA. Seems to me that capital repayments should be in my ISA earning 1.75% tax free. If capital payments are above the ISA limit use your partners allowance.

Under my current circumstances there's no point repaying debt other than being mortgage free which, I'm sure, feels good.

I'm a 40% tax payer and just completing my tax return. Interest earned, subject to further tax, in 2011/12 = £0.00. Happy days.:)

Loughton_Monkey

setmefree2 wrote: »

You never mentioned the tax on your savings - changes the whole dynamic especially if you are higher rate tax payer.

Not true. In my penultimate para, I said "net". I am receiving 4% gross. That's 3.2% net [because i keep myself under the 40% tax bracket now I'm retired]. So 3.2% less 1.5% mortgage rate is 1.7% clear profit on the whole of my original mortgage amount.

Any higher rate taxpayer with an offset mortgage at (say?) 4.5% today might well have filled up his ISA at, say, a 4% fix, but will only be getting 2.4% net on any extra he 'fixes' in the same way, or as low as 1.8% on Instant Access accounts.

In this case, he would use the Offset Mortgage for every penny of his savings, thus earning 4.5% net - that's around 7.5% gross.

wymondham

I Started on getting a decent pension. No way could I afford to pay for both at the same time!

purch

If I can remember properly back to 1996, me, the pregnant missus, and son aged 2 had lunch in Burger King and then went to see 101 Dalmations.

wymondham

purch wrote: »

If I can remember properly back to 1996, me, the pregnant missus, and son aged 2 had lunch in Burger King and then went to see 101 Dalmations.

Rock and roll!