Should I pay off my mortgage now and live with no savings in the bank ?

madazan

I suggest switching your mortgage to an offset type, so you wont be paying any interest and pay off your mortgage earlier.

runmartin

madazan wrote: »

I suggest switching your mortgage to an offset type, so you wont be paying any interest and pay off your mortgage earlier.

I say no. I needed to have my rainy day money.

I switched to a Woolwich offset mortgage 4 years ago and was in a position where all the linked accounts equalled the mortgage. I was tempted to clear the mortgage but some of the money was not mine (it was my wifes) and I thought I would need some cash in case something unpredicted happened. I have just made my balance £0 this morning and all I owe is the final exit fee.



PS does anyone know what the procedure is to pay the last bit of the mortgage i.e. the exit fee? I paid the outstanding mortgage using the internet so the money will not appear in the mortgage account until next week? Will the woolwich send me a bill for £195 (as per my contract) or £270 (current exit fee)?

David_B_2

I'm a no.

I like the secuirty of having some money there. Yes £1200 will so recope quite quick but I'd use all non-ISA savings to pay what I could.

busabus

I went for no, the amount of times I've suddenly needed to find a couple of grand cash puts me off doing that - although your credit card will help with that.

However I would say take a properly look at the mortgage - maybe pay a large chunk of it off. Depends on fees though.

Can you offset ISAs against mortgages?

Lotta

I would keep the ISA savings were they are and change the mortgage to an offset mortgage and link the other savings to the mortgage.

Cheers

Lotta_Littlies

Keep the ISA as the interest is probably compounding nicely in there so don't lose it. Hold back a nominal amount (one or two months worth of earnings) from your other savings accounts and throw the difference at the mortgage.

Lotta

LumpyCustard_2

Macce wrote: »

Hi,

I currently have a flexible mortgage of £35,000 @ 6.2%

At the moment I also have exactly £35K in savings !!! (ISA and savings account).

Question is should I blow all my savings right now and pay off the mortgage or wait another 6months to build up a safety buffer ?

How strange, I find myself in exactly the same position: 35K mortgage, more or less 35K split between cash ISA and shares/stock options in my employer's company.

I don't really want to dispose of my ISA as it's tax free, and I'm gaining share options every month until next spring if I stay with this company. A 35% increase in share price (note it's gone up 300% in the last 6 months) would be enough for me to eventually not have to use the ISA.

For the moment, I'm sitting tight, but over-paying my mortgage by 100% to bring it down month on month, so that I'll (hopefully) need less of the savings to pay it off when I decide to do it, and be paying less interest on the mortgage overall.

ailuro2

I'm another one who would spend another few months saving for a buffer, the usual figure touted around is to have 6 months earnings in the bank to allow you to survive if hardship should hit, or you wanted to take off round the world etc.

I'm with the 'overpay the £720 to reduce the overall interest you will pay' gang.

save-a-lot

Hi

What is the ISA savings / high interest savings split?

I would say no to paying it off especially from money saved within an ISA, the interest there is tax free for life and losing that entitlement could be costly, especially if you view that as a long term savings plan. Recently I worked out that £3000 saved now would be worth £18000 if left for 30 years based on 6% return.

So I would pay off as much as I had in regular savings first, then overpay the rest if the mortgage company did not charge me for the pleasure of doing so.

What early payment charges do you have?

Macce

At the moment I have 28K in a 1YR FIXED Northern Rock ISA paying 6% and the remainder in an ICICI 6% instant access account.

The amount of interest I getting from my savings nearly offsets the interest I am gaining on my mortgage so does not really matter.

As far as I know there is no penalty for paying my mortgage off early.

Macce

save-a-lot wrote: »

Hi

What is the ISA savings / high interest savings split?

I would say no to paying it off especially from money saved within an ISA, the interest there is tax free for life and losing that entitlement could be costly, especially if you view that as a long term savings plan. Recently I worked out that £3000 saved now would be worth £18000 if left for 30 years based on 6% return.

So I would pay off as much as I had in regular savings first, then overpay the rest if the mortgage company did not charge me for the pleasure of doing so.

What early payment charges do you have?