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I am better off saving than paying mortgage???
happyhero
Posts: 1,277 Forumite
Hi I think the answer is obvious but can someone see if maybe I have it wrong.
I am in a slightly unusual position but see what you think.
I have a OFFSET mortgage of £73000 which finishes in 2020.
I have virtually no normal income as I invest within ISA's and savings accounts, and do not make enough to pay tax, therefore all my savings are not taxed, aside from this the bulk of my money is in shares held within ISA's so no tax involvement.
Due to often being short of cash to pay the bills I have had to keep digging into my mortgage, frequently, with the result that my mortgage is still around the £72000/73000 mark, it fluctuates depending whether I can make several untouched payments or whether I need to take some back to pay the bills. Being an Offset mortgage it is very flexible/handy like that.
Obviously I realise this could be a problem so I have been building up my shares and savings to pay this mortgage off by 2020. I now have about just over £55,000 with about half on shares and half on savings. I am getting 3.2% on savings at the moment and lets say bettering 5% on shares.
My mortgage rate has sunk to a lovely 1.5% and has been there a while. I choose to pay £500/month off and monthly interest added is about £83/month on average.
Now my question is this, is this obvious or should I be looking at it a little deeper. Normally the advice is pay off all debts first before saving/investing but surely in my case I am making more interest than I am being charged, i.e. charged 1.5% and making 3% plus, so should I not stick with investing until I have to pay my mortgage off, whilst the balance of rates stays the same?
There is no penalty in my case for paying off early, not that I have enough yet as you can see.
Basically what should I do? Am I doing the best thing?
Any help or advice appreciated.
I am in a slightly unusual position but see what you think.
I have a OFFSET mortgage of £73000 which finishes in 2020.
I have virtually no normal income as I invest within ISA's and savings accounts, and do not make enough to pay tax, therefore all my savings are not taxed, aside from this the bulk of my money is in shares held within ISA's so no tax involvement.
Due to often being short of cash to pay the bills I have had to keep digging into my mortgage, frequently, with the result that my mortgage is still around the £72000/73000 mark, it fluctuates depending whether I can make several untouched payments or whether I need to take some back to pay the bills. Being an Offset mortgage it is very flexible/handy like that.
Obviously I realise this could be a problem so I have been building up my shares and savings to pay this mortgage off by 2020. I now have about just over £55,000 with about half on shares and half on savings. I am getting 3.2% on savings at the moment and lets say bettering 5% on shares.
My mortgage rate has sunk to a lovely 1.5% and has been there a while. I choose to pay £500/month off and monthly interest added is about £83/month on average.
Now my question is this, is this obvious or should I be looking at it a little deeper. Normally the advice is pay off all debts first before saving/investing but surely in my case I am making more interest than I am being charged, i.e. charged 1.5% and making 3% plus, so should I not stick with investing until I have to pay my mortgage off, whilst the balance of rates stays the same?
There is no penalty in my case for paying off early, not that I have enough yet as you can see.
Basically what should I do? Am I doing the best thing?
Any help or advice appreciated.
0
Comments
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Anyone.... please!0
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if you mortgage cost 1.5% and your savings/investments pay more than 1.5% (after tax ) then save otherwise pay off the debt.0
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