Invest cash or pay off mortgage

The_Thrilla

2010 wrote: »

Pay off the mortgage, it`s a DEBT!

Great satisfaction knowing the roof over your head is paid for and can`t be taken off you.

We were in the same situation. We paid off the mortgage. We also had a life assurance policy attached to the mortgage. When we redeemed the mortgage, we collected on the life assurance, too, when the policy matured.

Clearing the debt is also kinder on the blood pressure.

Any

Well at that good rate I certainly wouldn't pay off the mortgage.
Calling your house "rainy day fund" is also a bit.. well, naive.
To sell the house quickly if EMERGENCY happens can result in having to heavily discount and loose lots of money.
Your home is definitely not a rainy day fund. As Atush said-emergencies usually come un announced... that is why they are emergencies.

I personally would invest the money, or part of it. You must do better in investments then the 2.25% you have on the mortgage. That is a cheap debt and you have the opportunity to make more money. S&S Isa would be the way to go.

Or if you don't feel like invetments all the way, then part of it.

If you don't feel like investments at all, then repay the mortgage. No regular savings account will give you much right now.

gadgetmind

I was in a similar position a few years ago. I *knew* that paying off the mortgage was the wrong thing to do, but I still did it and have *zero* regrets.

In the OP's position, I'd pay off the mortgage and then start feeding the money saved into S&S ISAs and/or pensions. The £15k needs to remain as an emergency buffer IMO and may also need adding to over time.

AdamS

Do you pay tax on your savings? If so, bear that in mind.

Personally I would save as much as I can in any savings account where I can beat the 2.25% mortgage rate, after tax of course.

However, if your more likely to spend or fritter away some of those savings because they are accessible, bear that in mind, maybe paying off the mortgage would be a better option.

jonnyb

I will receive about £70,000 in sharesave proceeds in Sept 2013, and have a mortgage of about £59,000 but it is a lifetime tracker rate of 0.17 above base.:beer:
So it costs me about £400 per year !:j

I know I can make a lot more than that just investing in solid companies with 4-5% dividends, and I also have plans to trade some shares as well, aiming for capital growth.;)

So I'm not paying mine off, but will hopefully remain safe in the knowledge that I could do so if necessary.

gadgetmind

jonnyb wrote: »

I will receive about £70,000 in sharesave proceeds in Sept 2013

Woop, woop, CGT warning!

What are your gains on this? Do you know about direct transfers to ISAs of SAYE shares? And what about transfer to spouse?

Olivia_Burgess

Pay some of the mortgage off so your loan to value interest rate hopefully goes down, reducing your monthly payment. Then keep the rest in an ISA.

jonnyb

gadgetmind wrote: »

Woop, woop, CGT warning!

What are your gains on this? Do you know about direct transfers to ISAs of SAYE shares? And what about transfer to spouse?

I am fully aware of all the implications and options. I will indeed be giving approx. half to my wife - I say giving, she has an account with selftrade that I "help her manage"

And yes I am aware of the transfer to isa option, within 90 days, and i have a full year's allowance ready and waiting, as does my wife.
There will be a bit left to hold until the next financial year but I can live with that.

Thanks for the comments though Gadgetmind.:T

The gains are approx. £55,000 at the moment.

atush

Well done, We were in a sharesave for the first time, just before the Crunch


Never saw the strike rate (so plans were closed, cashed then a new one opened), then moved companies so never saw that elusive profit lol.

gadgetmind

jonnyb wrote: »

i have a full year's allowance ready and waiting, as does my wife.

Does she have her own SAYE? Your SAYE shares can be transferred to your ISA but not to hers. I tried it and had it refused by the ISA company after they checked the rules with HMRC.

The gains are approx. £55,000 at the moment.

Happy days!