Should I pay off my mortgage discussion

grannybroon

Have not read previous posts so apoligies! Just one year to go on a 35 year mortage with an endowment change!!! DH recently retired, we only pay £67 a month and have been told no negative equity but we will only break even. We don't think any point paying off now. Probably would incur terms to pay early and paying such a paltry amount not worth it.

DD and SIL fixed rate 2 years ago for 10 years. Well, hope it works out.

GB

deefadog

Well this discusion could not have come at a better time, currently have a mortgage of 120k fixed for another 4 years at 5.15% and have a lump some of 77k.

After much discusion we have decided (But still open to change) to Split this up - Pay £26k off currrent mortgage - but still keep the monthly payments the same, invest £25k in to several policies (not sure which ones as of yet - that's up to our family IFA), and 25k into to 2 overseas apartaments, one which we will sell on compleation the other to rent out on completion.

So once the fix rate ends (4 years) we hope to pay a majority of it off, and still have an investment with the overseas rental for the future, also we have the policies in which if we do need some emergancy cash we can access it from them, obviously losing on interest but it's there.

So any comments on this?

getmore4less

invest £25k in to several policies (not sure which ones as of yet - that's up to our family IFA),

Don't like the sound of these, think about direct investment in an MAXI ISA less money for the(potentialy) commision hungry IFA.

25k into to 2 overseas apartaments, one which we will sell on compleation the other to rent out on completion.

research research reseach, easy to come unstuck on this one as people are finding out in a number of locations including the UK.

deefadog

Thanks

Don't like the sound of these, think about direct investment in an MAXI ISA less money for the(potentialy) commision hungry IFA.

The IFA is close family, so I will not get ripped off, plus i used the term policies losely, it could well include ISA's

research research reseach, easy to come unstuck on this one as people are finding out in a number of locations including the UK.

Yes have been researching for the last year on this, I have spoken to people who have done the same thing last year and the year before plus i will be visiting in a few months before comitment. - No matter how sure it has been or is said to be there is always a risk i know, but i persally think it's worth the risk - worst case senario i would lose £850! Best case senarior make £15k profit - so it's a risk worth taking i feel.


Basically i need to make around £38k (taking in to consideration the mortgage amount in five years) from my 76k in 5 years, well that's the aim - it's going to be tight I feel, but a good challenge!

Jacques_Cartier

BLACKHURSTM wrote: »

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?

No need anymore. All deeds are held by computer. Paper copies are worthless nowadays, I am told. Check out the land registry online, before you shred them, though!

Jacques_Cartier

Dithering_Dad wrote: »

Good article, and very useful to link to when the next "Don't pay off your mortgage" Troll turns up.

Not quite so, I'm afraid, Dad. There are good reasons for keeping your mortgage that this article hasn't mentioned.

First, you can get an insurance policy against a mortgage that pays out if you get sacked - and you'd need your savings if that happened.

Second, if you are a non-taxpayer, you can get a better interest rate on savings than you pay on your mortgage. If your partner doesn't work, she or he should bank the savings, and their personal allowance offsets the tax.

And third, mortgages are "compulsory saving". One might be tempted to spend the money on rubbish stuff if one didn't have to pay for the house!

Jacques

Dithering_Dad

Jacques_Cartier wrote: »

Not quite so, I'm afraid, Dad. There are good reasons for keeping your mortgage that this article hasn't mentioned.

First, you can get an insurance policy against a mortgage that pays out if you get sacked - and you'd need your savings if that happened.

Not for me, I have my own company and so this sort of insurance is prohibitively expensive. Instead I have a large amount of savings in my Offset account. Once my mortgage is gone I'll move this into cash ISAs.

Ask yourself this question though, if you lose your job would you feel better if you had an insurance policy that typically pay out after 6 weeks, don't pay out if you were sacked or left voluntarily because you were stressed with the job or fell out with the boss and only pay for 12 months.

Or would you feel better if you lost your job and didn't have a mortgage to worry about?

Jacques_Cartier wrote: »

Second, if you are a non-taxpayer, you can get a better interest rate on savings than you pay on your mortgage. If your partner doesn't work, she or he should bank the savings, and their personal allowance offsets the tax.

True, but wouldn't you be tempted to spend the savings on something other than your mortgage?

Jacques_Cartier wrote: »

And third, mortgages are "compulsory saving". One might be tempted to spend the money on rubbish stuff if one didn't have to pay for the house!

See previous comment.

nobblyned

deefadog wrote: »

Thanks

Yes have been researching for the last year on this, I have spoken to people who have done the same thing last year and the year before plus i will be visiting in a few months before comitment. - No matter how sure it has been or is said to be there is always a risk i know, but i persally think it's worth the risk - worst case senario i would lose £850! Best case senarior make £15k profit - so it's a risk worth taking i feel.

I'd be surprised if there was any situation where that was the risk to reward ratio. I'd be very careful as previously advised, a ratio like that would make me even more suspicious!

deefadog

I'd be surprised if there was any situation where that was the risk to reward ratio. I'd be very careful as previously advised, a ratio like that would make me even more suspicious!

Thanks for the word of caution, but...

This is not like a sales pitch ratio. The £15k is going on the last 5 years performance, if the developer pulled the plug on the whole thing or if there was an earth quake and it all disapeared then I would lose the £850 in fees, that's all i meant

What alternatives are there?

kazza_2

Does anyone know of a mortgage which is identical (in every way) to the One Account but has a lower interest rate?
Ta.