Should I pay off my mortgage discussion

nobblyned

deefadog wrote: »

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?

Ah, I see what you mean. I thought you were saying £850 was your total exposure, whereas it - and your risk - after purchase will be much higher.

As for alternatives for making loadsa cash, If anyone knew I'm sure they would be too busy filling their boots to post on here!

luiswinner

I'm wondering if this is taking in consideration the interest calculation of the mortgages. I mean, that when you start paying your mortgage you are paying more interest than capital and otherwise at the end of the period.
then should it be more fair to be calculated in that way instead of a direct interest rate? please advice.

Andy_ArT_Trigg

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 think Martin meant that when many people think of how much money they owe they often don't think of their mortgage. They add up what they owe on credit cards, loans etc but don't think about the £200,000 they owe on the mortgage.

It's not that they forget, it's just it's such a big debt, and it usually lasts so long that it's just accepted as part of the cost of living in the same way as the food bill and the gas & electric etc.

MSE_Martin

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.

If you ask ten people how big their debts are most will answer somewhere between £0 and £20,000; even if they have mortgages

I'm wondering if this is taking in consideration the interest calculation of the mortgages. I mean, that when you start paying your mortgage you are paying more interest than capital and otherwise at the end of the period.
then should it be more fair to be calculated in that way instead of a direct interest rate? please advice.

Yes it does take this into account - in fact his is the crucial point - by making capital repayments you decrease the amount of interest accruing. Don't worry it all works

Martin

countrygirl84

BLACKHURSTM wrote: »

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

Hi. Have you looked into how much it would cost to keep your deeds in a bank? My bank charge only £20 per year including VAT. Also, the old fashioned deeds that used to be released when your mortgage expires doesn't really exist anymore as it is all stored electronically. The admin cost involved simply updates the records to show that the property is no longer mortgaged! I would say you're miles better off to get rid of your mortgage for good and find an alternitive place to store them.

BELL-ANNA

Hi - I'm new to the forum and was very interested in this item and I just wanted to ask a question. We have a mortgage of £40,000 which we had on interest only. We have savings of £20,000 and have transferred this to an off-set mortgage. We have reduced our monthly payments by half and are of the opinion that the money is better in our pockets than the building society. I just wondered if anyone had good/bad experiences with off-set mortgages? Would it be better for us to reduce the mortgage by the £20,000 and keep the mortgage on interest only.....it's a minefield out there!

jamesd

luiswinner, it fully takes into account the split between interest and capital and the calculations are correct to use the after tax (or tax free) interest rate to compare to the mortgage rate.

The reason this is so is that it's looking at the return on investment for overpayments of capital and that's always capital, never interest. The choice is between reduced interest payments on a mortgage overpayment or extra interest or returns earned from savings or investing. That's just a case of comparing different rates.

Jacques_Cartier

Dithering_Dad wrote: »

Ask yourself this question though, if you lose your job would you feel better if you had an insurance policy ... or no mortgage

Thanks for the tip, Dad (I haven't said that for a long time!) but I'd prefer to take the payments for a year, and then pay off the mortgage (!), and spend the extra interest I get from my savings (over and above the mortgage interest (see tax tip above)) on beer and wine to ward off the blues during rainy afternoons in front of the telly! It's a no-brainer, and I might even get a bigger mortgage to make even more money!

Jennyi

I've got an offset mortgage of 4.79% at Clydesdale bank. I've been starting to use it for savings, but then I started to wonder, am I better actually paying off the mortgage? If I reduce the capital amount I pay less interest. How do I work it out?
Thank you.

Stuart96

I too have an offset mtge and offset all the debt. My savings are instant access, my interest only loan sees the capital fall by my mortgage payment & the effect interest rate on my savings is mtge rate + my marginal rate of tax.

It seems to me to be win/win yet the recent article on pay off debt made no mention of Offset mtges.

I completely agree that debts with high rates of interest should be paid off (credit cards - never pay their rates!) but if you have savings and a mortgage and can get a competitive fixed rate then offset offers a great alternative but not for all!!

Stuart96