Should I pay off my mortgage discussion

DAVE1003

right here's my problem :
i have just under 4 years left on my mortgage which is about £10,000 endowment which is still on track. & £6,000 repayment.
i have about £9,000 in isa's & £5,000 in icici savings bank. my mum will lend me the other £2,000 on a short term loan to the rest of my mortgage off.
the only thing is i have some land near my house which i have planning permision on & i would hopefully want to try & start building next year.
So if i used all my savings i would have to get a new mortgage straight away instead of using the savings to get things started.
(i forgot to mention my mortgage is a +.5% tracker & the only penaly i would have to pay is £100 settlement).
i thought straight away about clearing my mortgage but am now thinking of just leaving it to run its course.
what do you all think ?????????????????????
thanks,:beer:

jamesd

Leaving it to run its course seems sensible. It's cheap enough and cheaper than trying to get construction financing. If you do find an estimated construction bill that exceeds your cash you can probably raise more money from your existing lender easily enough.

seniorop

Help on mortgage pay off or not
Thanks jamesd for your advice,we are not really upto speed with the stockmarket isa side, any advice on where to get further help would be appreciated ----do you think that using the maturing endowment in stock isas would give a better return whilst leaving the mortgage to run its remaining 3yrs 9 mths or not?

jamesd

Yes, I do think at the moment that using the endowment for investment while leaving the mortgage to run its term will leave you better off. More ups and downs along the way but so long as those don't upset you greatly that's OK (and if you think they will, look at the last paragraph for an absolute return fund to consider as part of your selection of funds). It's possible that in the middle of next year things will look worse than they do now so it's worth asking again then.

I suggest that you read Ok then - How do I choose a S&S ISA to get an idea of what a sector allocation is. That's how you'd pick a range of funds to reduce your risk while increasing your likely returns. Using just one fund is a bad idea, however good it is.

If you want some funds to look at you might consider BlackRock UK Absolute Alpha if you're worried about the UK markets and will take lower growth for extra protection against value drops and/or Invesco Perpetual Income, Accumulation units, for a long term excellent performer (better than the Blackrock Absolute fund but more likely to drop if the market falls. Compare the charts of the two for the last year using the H-L charting tool to see how their performance differs. For non-UK cover you could consider Artemis Global Growth.

coookieman

1. Iam confused, seen the question re should i pay in full , well my scenerio is got endowment plenty in it to pay mortgage in full should i pay or do you keep a little on account, suppose every ones details are different, any idea on this would be helpful, money burning a hole in my bank account dont know what to do for best?;)

JD.

jamesd

Keep a little on account. That way you show regular, if small, mortgage payments and can ask your lender for more money if you ever need it. Meanwhile, just having a mortgage makes you a better credit risk for routine lending like 9 months free credit deals from shops.

coookieman

so dont pay it in full then ????????

tallgirld

Will run my mortgage down to £1 and then expect Abbey National to take back their £1 over the remaining 41 months that are left!!!! That way they can wait for their £225 exit fee!!!

cheeky_lil_monkey

A little advice would be greatly appreciated on this!

DH and I are just starting out in life (mid-20's). We have about 40mths left of a fixed rate 5% mortgage of £140,000. We have about £20,000 in equity (due to market rise and a nice-sized deposit) and about £15,000 in savings.
We are currently paying interest only, but can make overpayments of up to £499 per month and can also switch to repayment should we wish.

We're looking at starting a family at some point and I wouldn't be working for about 8 years so we'd just have DH's salary. Are we best saving what we've got, or keeping some savings and paying off some towards the mortgage or are we best sinking it all into the mortgage?
We're looking at moving and are unsure whether we'd have to take the full amout of the mortgage for our next home that we currently have and if we didn't whether we'd be faced with repayment fees, or whether we'll be able to negotiate a new amount of mortgage under the same mortgage 'contract'. All we know for certain is that we can move and keep the fixed rate of this mortgage.

jamesd

Cash ISA's pay well over 5% so your first stop should be ISA use, to get the extra 1%+ that's available above your mortgage rate. Only once you've fully used your ISA allowances is it worth considering paying off anything on a 5% mortgage.

If the plan is to start the family in five years or more you should also be using the full stocks and shares ISA allowances if you can, since a balanced range of investments in those can be expected to grow more than money in a cash ISA.

It seems best to keep this mortgage for a move. The interest rate is good and you're not going to get a better deal in the near future. Might be possible to do better in say six months.

You should also look to get a good longish term mortgage deal before the family income drops, to avoid the need to remortgage with lower income, possibly at an income multiple that's too high for lenders to accept. Life of mortgage Bank of England tracker rates are good for this because they never revert to SVR and force you to remortgage to avoid the high SVR interest rates.