Should I pay off my mortgage??

JohnnyG

This is my first post, so please be gentle with me.

My outstanding mortgage currently stands at £20k and, in the new year, I will be given a lump sum to pay it off. Now my question is, should I pay it off?

My mortgage interest rate is 0.73%, yes 0.73% (I agree, it's a brilliant rate). So I was thinking, should I invest the £20k and use the lump sum, and interest, to pay the mortgage off. If I can get a half decent interest rate, that allows instant access, by my workings I should be quids in. Thing is, it seems so obvious that I'm afraid I've missed something out.

I don't work, so this lump sum has to be used to pay the mortgage off. Any advice would be greatly accepted

My current monthly interest payments on my mortgage is about £12, but that's reducing every month as the balance drops.

Many thanks in advance.

pawlala

Most savings rates with a bonus will give you a better interest rate than your mortgage currently, so saving is probably in your best interests. That said, how long does your 0.73% rate last for? If its for the remaining duration of your mortgage you will forever be a MFW until the term ends. It might not be very MSE but if you pay it off you can say "I did it!"

Spiggle

What a lovely position to be in.

I agree with pawlala, because your rate is so low, it will always be lower than you can achieve with savings.

You mention you don't work so it may be that having £20k in savings could affect any benefits you may be claiming/entitled to.

Your decision but I'd pay it off so that my home is mine and no-one can ever change that fact.

All the best,
Spigs

JohnnyG

Thanks for the replies. My interest rate will stay the same as long as the Bank of England rate remains at 0.5%.

I get a pension next year so, apparently, I'm not entitled to any benefits, etc.

Kind regards, JG.

Sepa74

I would save it. Not just because you can earn more interest on the savings, but also because it is a nice sum to have to cover emergencies.

JamesK10

Congratulations Johnny! We don't have cards and celebrations for paying off mortgages, there should be something like that.

Most good instant access ISA savings deals, unless they have specific conditions where the payouts are delayed past 12 months, start in April, so it's a pain starting one at any other time. (Disregard this if the savings account you're thinking of, isn't an ISA).

You might as well start off the pensionable part of your life without the millstone, even if you are so so so close to paying it off and I see the logic about getting some final interest on the lump sum before you give it to the bank. However you could use your pension to make regular payments into any other ISA from April 2013, it's another vote here for paying it off. Best of luck whatever you decide.