Early Repayment of Mortgage

pennpeel

Hi all i'm new to the site, and have a question regarding my mortgage. I may be in a position to repay my mortgage in October. My wife will be made redundant so the money will go towards paying off our mortgage in full, a soon a she can get another job.

I would prefer to get it paid off and got rid of, whereas my wife seems to think that it's best to keep the mortgage going and keep a few thousand on it. It used to be tax advantageous to keep a mortgage years ago but i thought it had changed now.

We can pay off early without penalty, and obviously borrow against the property or down size if required in the future.

Does anyone know a good reason to keep a mortgage alive if it's not required?

harvey115

Mortgage is just a kind of debt although much more acceptable one then others.

I am not sure what Tax advantages you are getting with the mortgage (if any). Paying off the mortgage as compared to keeping the money in savings would be good if you have higher interest rates on your mortgage.

If you can get better interest rates on your savings, it might be good idea to just stick the money in their rather then to repay the mortgage.

Thrugelmir

What interest rate are you paying on your mortgage?

pennpeel

I must confess I don't know what rate I'm on we were on a discounted rate with the nationwide but that ran out and we are at normal rates. I always remember taking out our first mortgage in 88 and getting a letter say in you will have paid £xxxx by the time the twenty five years is up, we have moved a number of times and extended the term a few times. I personally would feel happier to pay it off, but only if we don't have to pay a fortune for the pleasure, we currently over pay each month

Yorkie1

In addition to checking your mortgage rate, it might also be double checking whether you have sufficient rainy day funds stashed away - don't leave yourselves short of these in order to prioritise your mortgage.

Thrugelmir

pennpeel wrote: »

I personally would feel happier to pay it off,

If you are not tied into a fixed rate product then there's no exit fees. Other than the final release charge which is normally a couple of hundred £'s.

There is something to be said for being mortgage free. As means there's no longer that monthly commitment to pay.

dimbo61

Please check if you are now on the BMR rate with Nationwide which is 2.5%
You may well be better off saving into cash ISA,s paying over 3% Tax free and using the rest of the money to clear some of the mortgage debt