Should I pay off my mortgage discussion

ailuro2

Our overpayment fund is still accessible to us, we have a Co-op mortgage which is now penalty free for overpayments.:D

The One account and other offset accounts tend to charge higher interest, but the money in your current account is offset too- so it depnds on your day to day balance too, not just your 'savings'

Currently the one account is at 6.7% interest- see here- http://www.oneaccount.com/onev3/rates/toa-rates.shtml but our Coop tracker mortgage is at 5.99% , so a saving ov 0.71% for us,but we can still access the money if necessary- although in reality we never have- holiday savings go into a higher interest savings account, the current account balance pays around 3% on what's left in there between payments.
Hope this helps:D

craigolaman

Interesting article.

Would it be worth getting a loan of say £10,000 and paying it off a 25 year mortgage of £150,000. Would the money saved on interest payments off the mortgage be higher than the repayments for the £10,000 loan?

Kaz2904

I haven't got the faintest idea but think that you would have to run a theoretical scenario through a calculator.

keeperbear

The article states that:
>Many people don't think of their mortgage as a debt

Sorry, but I have never met a mortgage holder who doesn't see their mortgage as a debt.

Dithering_Dad

A lot of people "speculate to accumulate" and so borrow money to make money such as buying a house, doing it up and then selling it at a profit. Alternattively you can borrow money and invest it into a business and again net more money at the end.

Some people see a mortgage not as a debt but as an investment opportunity.

As an aside.. Keeper bear, do you think your one-liner digs at people are helpful in anyway?

jamesd

It would have been good to see an example of the UK equity interest sector in the investing section, since that's a moderate risk area.

JIBEE, it's worth asking about the cost of changing the term to one that will increase your monthly payments by 1000. Or more tricky, to one that will increase them by 3000 a month for six months then changing back to the current payments again. Sometimes term changes are possible with lower total cost than the 439 it would cost you at six months of interest. It isn't worth paying six months of interest to pay now. If the money is in a cash ISA, better to keep it there and when it's time to remortgage consider a mortgage that allows offsetting cash ISA money, like the one from Intelligent Finance. That way you can use the money to offset and save mortgage interest without losing the accumulated ISA allowances.

bunkersmug, depends on your tax rate. If you are not a tax payer or your wife or husband isn't, then putting the money in a savings account in their name and registering for gross interest will make you more interest than the mortgage cost, so it'd be better not to pay it off the mortgage. Otherwise as a basic rate tax payer you'd need 5.9% from taxable savings to be better off in savings and that rate is available from IceSave and others, so saving with one of them would beat using it for the mortgage. If you're a higher rate tax payer you would need 7.9% from taxable savings to be better off and to get that you'd have to do something like lending the money in Zopa's C markets.

tanglewood, as higher rate tax payers, your first course should be to use your ISA limits every year. Your theory on the offset mortgage is correct after that. You're in a position where one probably makes sense. The One Account current account mortgage might as well but the interest rate is so high that it's better to use a normal offset mortgage in case you do pay interest.

craigolaman, the loan would only make sense if the loan interest rate was lower than the mortgage interest rate. It's very unlikely that you could find a loan with a lower interest rate than a mortgage so it's unlikely to make sense to do it.

BLACKHURSTM

I am about to pay of my interst only morgage in full.
Is there any advantage in leaving a small amount outstand say £500 -£1000,The thought behind it is that I would still have my DEEDS securely locked a the bank for free?
Still leavin the £500-£1ooo in an ISA earning interest although slightly less

getmore4less

I had posted on the resurected "Don't" thread but the post could well have been here

http://forums.moneysavingexpert.com/showpost.html?p=5679191&postcount=180

The key thing is that paying of the mortgage should be part of the long term stratagy that will probably involve investments and the article really does not cover this.

More attention should be paid to pensions and ISA's and other investment options early so you don't find yourself with excess money that you can't protect from future tax.

seven-day-weekend

Our mortgage on our family home was cleared in 1996.

I actually didn't think about much of the stuff in the article (although it is good stuff:money: ) - all I was concerned about was that it was a debt, it had to be cleared as quickly as possible like any other debt - also that once it was cleared no-one could take our home away.

So we just continued paying the 15% payment even after the interest rate had dropped and payed it off in 20 years instead of 25.

I still say pay your mortgage off asap (providing you also have some savings for a rainy day).

We now have two mortgage-free houses; we are in our 50s.:beer:

seven-day-weekend

keeperbear wrote: »

The article states that:
>Many people don't think of their mortgage as a debt

Sorry, but I have never met a mortgage holder who doesn't see their mortgage as a debt.

I have... I have met several people who never intend to pay their mortgage off; to them it is the price you pay for living in the house.