Paying off mortgage vs Saving

jamesd

davidqu wrote: »

Tbh if totally in two minds, I was looking at the saving rates etc and the thought of clearing my mortgage came up, I'm not entirely sure what ill do.

Savings rates are almost as safe as mortgage capital repayments. Not quite as safe because savings are subject to benefits means tests, so are vulnerable to loss that way if you end up on means tested benefits sometime.

But when it comes to saving money there are more options than just savings accounts. Plenty of income funds pay out more than 6% and even really popular mixed income and growth Invesco Perpetual High Income pays out 3.3% as well as it's growth/decline of capital value.

While lower mortgage is nice, so is more money available to use if you need it to deal with unemployment or some emergency. Which of those makes you feel more secure depends on the person. For me it's the money because I can use that to pay other bills, not just the mortgage.

BarleyGB

I have a high risk appetite where investing is concerned so my situation may not be typical or desireable to others?

The last thing I would do is pay off the mortgage, ive currently got equivilent savings to my mortgage, nearly all invested in equities, funds etc. Over 2 years its been growing at 20%+, this may not continue or the values could drop significantly but I like to think we're starting to pull out of the financial crisis and there is every likelihood average investment returns of 7%+ are achievable.

davidqu

I've been thinking about it, I think I'm gonna pay the mortgage off at the end of the month once my Britannia account matures. I'm being honest, a lot of people on here are a lot more clued up than me in regards to making investments work for themselves.

I like the security in owning 100% my own house, I'm gona open a first direct account and pay in what my mortgage was into that, it pays 6% and hopefully get my savings back up.

I still have an emergency fund plus an ISA and S&S ISA so I think this is best route for me.

jamesd

Enjoy the security and sense of freedom that will give you!

There's no one perfect answer in this case and your choice is fine.

badger09

jamesd wrote: »

Enjoy the security and sense of freedom that will give you!

There's no one perfect answer in this case and your choice is fine.

Absolutely agree.

Impossible to put a monetary value on the peace of mind which comes with owning your home outright.

OP - all the best with building up your savings again. Once you have achieved that level of security, maybe you'll consider some longer term alternatives to 'bog standard' savings accounts.

wronlaster

Go ahead and clear it ...why you are waiting for that time forced yo to pay that one .

AlwaysLearnin

Have you considered an offset mortgage? You could set one up and fully offset, and arrange for the mortgage payments to come out of the offset savings account, making it self sufficient. You wouldn't be bothered about what rate you get as you'll be fully offset, so you could do it cheaply.

The benefit would be that you would still have access to funds in an emergency. Someone mentioned that having no debt on your credit file might also be a disadvantage, which this could help resolve.

I know it can be done at YBS, so you could look there to research, but others may also be available

davidqu

Hi all again

I am now in the position to pay the mortgage off which I am going to do next week, my fixed term deposit matured so have the money now

I do have a question though

My current mortgage deal expires on 31st August 2013 we arranged for a new 2 year deal to commence on 1st September about 5-6 weeks ago before I decided I wanted to pay the mortgage off

Currently my early repayment fee is £991.

Is it possible I can cancel the deal that's to commence on 1st September so I can pay my mortgage off without an early repayment fee once my current one expires?

Thank you in advance

badger09

I would have thought so, but you should definitely check with your mortgage provider. In writing!

davidqu

badger09 wrote: »

I would have thought so, but you should definitely check with your mortgage provider. In writing!

I have called them but it sounds as if I'm just through to the main call centre, no expert just someone taking calls and he said I'm tied in? I've only got 27 days to get this sorted before the new deal kicks in, obviously If I can get out paying the 991 I would be over the moon, I'm not sure if anybody on here has experienced something similar