To Pay off or not to Pay off that is the question.

Hi

My Mortgage will soon be coming off its fixed deal and I am shopping around for the best deals.

Im edging towards the HSBC Lifetime Tracker @ 2.99% with no fees as from what I can tell its flexible and will allow me to shop around longer of fix down if needed at anytime in the future.

My other other option and main query is, should I use My wife's & I's ISA savings to pay off the mortgage altogether? Currently between us we have enough to wipe out the £74k debt but obviously we would be loosing all those previous years tax free savings. I'm just not cleaver enough to work out what is best?! Keep savings and Mortgage or clean off mortgage and start saving again in the ISA's? Come renewel time there will be 15 years left on mortgage.

Thanks in advance for any input
Michael

Replies

  • BeckyyBeckyy Forumite
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    What kind of interest are you getting on your ISA savings at the moment? :)

    If you are getting less interest than you are (or would be) paying on the mortgage, then it makes sense to pay it off all together, or almost all together.
  • With Halifax @ 3% at the moment and lock down/move every year chasing best rate (Or close too if not much in it, stuck with Halifax this time save the faff)
  • BeckyyBeckyy Forumite
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    Have a double check that your interest with Halifax isn't part of 12 month bonus, and that it hasn't dropped to say 0.5% after you've had it for a year.

    If you are getting 3% interest then it makes sense for you to keep the money in your ISAs until it starts to earn less interest than you're paying on the mortgage.

    However, for the sake of 0.1% (if you went with HSBC 2.99%) I would pay the mortgage off and get rid of it. As long as you have a decent buffer, enough to fall back on, then I would be happy. Just my two pence though!
  • BFMBFM Forumite
    101 Posts
    presumably there is also a half and half option to keep a chunk of savings and pay off a chunk of the mortgage.


    and just keep on overpaying and filling the ISAs back up.

    i hear what you are saying about the interest free ISAs - interest rates have to go back up at some point so the more you have in ISAs when that happens the happier you'll be.

    what happens when the fixed period ends - what does the rate revert to as I assume any other option will come with a mortgage fee which you also need to factor in.
  • The ISA's are with Bonus for 1 year but I always set reminders and either transfer full to best rate I can find or contact the current provider and move to their latest release which is usually still with a bonus for the next 12 months.

    What do you folks think of the HSBC Lifetime Tracker @ 2.49% above Base (0.5%) = 2.99% with no fees?

    Anyone recommend another Mortgage provider/deal I should perhaps look at?
  • SpiggleSpiggle Forumite
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    Hi,

    What a great place to be, congratulations.

    HSBC are renowned for being the pickiest lender (along with first direct which is part of their group) so you would need squeaky clean credit records to get through with them, i.e. no late payments, no ccj, no unauthorised overdraft use etc for six years for both you and your partner.

    What rate have you been paying on your mortgage? I ask this because you may already have been, as Martin puts it, losing on your savings if you've been paying higher than you've been earning.

    Whether to pay it off or not is both a numerical decision (calculating interest rates) and a personal attitude decision. With rates low everywhere (saving and for some borrowing) the numbers can be very close. So that brings you to your personal attitudes which only you know.

    For me, due to my own attitude, if I had the funds to pay it off I would. My home would truly be mine. No matter what happened, sickness, unemployment, etc nobody could take it away from me. If I were in the unfortunate position where I needed to claim any sort of benefit, I wouldn't (initially) have stacks of cash savings that would affect this (I work and pay my way and so would feel it my right to claim what I was due). The extra money each month that was not paid to the mortgage would quickly rebuild a savings fund. I would enjoy my work even more (I love my job) as I wouldn't feel I had to do it to pay the mortgage. These are my thoughts for my situation.

    You must now do the calculations and consider deeply your attitudes to the mortgage.

    I wish you luck and hope that the fact I'm green with envy hasn't been too apparent!!!

    All the best,
    Spigs
    Mortgage Free October 2013 :T
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