Should I pay off my mortgage discussion

lockman_2

we have got 24k in two isas between me and my wife. would we be better off using this to pay off a chunk of our 108k mortgage as the interest rate on the isas is so low.

weezl74

lockman wrote: »

we have got 24k in two isas between me and my wife. would we be better off using this to pay off a chunk of our 108k mortgage as the interest rate on the isas is so low.

Hi Lockman and welcome

A lot of it will depend on how much emergency savings you already have elsewhere additionally to the 24k, what interest rate your mortgage and ISAs are on and whether you get charged for overpayments by your lender. If you can post those details, someone clever will be along to advise!

2Sheds

jojojo1 wrote: »

I am reaaaaaallly confused as to what to do! I keep reading different things which just get me more confused.

WE have a mortgage of £150k. Property worth 215k. We also own a flat, with no mortgage with approx £150k.

The rent is £800 per month we get, the mortgage is £1200 per month.

Is it worth selling the flat to pay off the mortgage to leave us mortgage free?

We could then put the same money aside... each month?

It would be less pressue too!

Our rate is coming to an end shortly so bit confused!

If your going onto the variable rate, you should find your £1200 drops quite a bit, depending what it is right now.

As it is right now, sell flat pay off mortgage and have at least £400 a month to save or spend.

We had the chance of moving round the corner to a slighty smaller house, we would have been mortgage free and had around £600 a month to spend or save. Wish we'd done it now

bolukeduke

HI I am looking for some advise

I owe £14,000 on my mortgage but I am about to be made to retire on ill health grounds and don't know what the future will hold relating to an operations ect which may allow me to work again.

I will receive a pension which as yet are not confirmed but at the least will be £9,000 at the most £18,000 a year and my wifes employment of £20,000. I will also receive a lump some of £24,000 and have savings of £15,000 and further compensation at the least £25,000

So in total I will have available at least £64,000 savings.

should I pay of my mortgage which has 13 years left at the Halifax variable standard rate.

I think yes but is there a better way?

bobthebob

the calculator only compares interest with interest. it doesnt take into account that an overpayment will actually reduce the amount owed and thus reduce the basic payment as well as the interest.

the easiest way to work it out is to use the bbc mortagage ( google it) calculator at your current level and then again at the level reduced by your overpayment, then work out how much you would save in repayments over a year.

for me paying off 10 000 on a mortage of 1.5% actually saves me £485 in payments in one year which in real terms is a tax free return of 4.85% despite my mortagage rtae only being 1.5%

pfpf

Are big players in the mortgage game, ie The Woolwich likely to give a discount for paying off the mortgage early?

i only ask as my current rate is 1.09% and i am sure they would like to see that mortgage repaid.

theres no point in doing so without an incentive when my savings rate is 3x this amout.

Ed_Zep

pfpf wrote: »

Are big players in the mortgage game, ie The Woolwich likely to give a discount for paying off the mortgage early?

i only ask as my current rate is 1.09% and i am sure they would like to see that mortgage repaid.

theres no point in doing so without an incentive when my savings rate is 3x this amout.

I doubt it. 1.09% with them is better for them than a greater % with another lender.

Have you had a letter asking if you'd like to make overpayments? I got one from the Newcastle. I've got a low interest rate, too.

Trish1968

Welshlassie wrote: »

You can only put £3,600 into a cash ISA each year. Does you mortgage allow you to offset ISAs (some do) that way you get the best of both worlds.

It is recommended that you have between 3-6-9 months income in savings as an emergency fund. It doesn't really matter where you have them as long as they are accessible.
Martin does recommend filling you ISA allowance each year before overpaying your mortgage.

HTH

I was interest in the filling the ISA allowance each year before overpaying the mortgage bit.

Due to the low interest rates on ISA's and the fact we are on a fixed mortgage rate for the next two years of 5.8%, I thought it would be better to use the money I was going to put into the ISA to overpay the mortgage instead. Nationwide allow us £500 each month.

Is this not the best way to do it. We can only pay money into the ISA or repay the mortgage, not do both. Many thanks

stphnstevey

Trish1968 wrote: »

I was interest in the filling the ISA allowance each year before overpaying the mortgage bit.

Due to the low interest rates on ISA's and the fact we are on a fixed mortgage rate for the next two years of 5.8%, I thought it would be better to use the money I was going to put into the ISA to overpay the mortgage instead. Nationwide allow us £500 each month.

Is this not the best way to do it. We can only pay money into the ISA or repay the mortgage, not do both. Many thanks

Nationwide allow you to draw the overpayments back at any time - just in case you didn't already know - effectively a bit like a regular savings account:).


For me, I have been putting all spare cash into a Stocks and Shares ISA. I estimated the return to be around 12% (before the recession started), but over the past 3yrs I have been doing it, only seen a 2% return - worst than a savings account.

Now guess I have to think what return I might see this year and decide if the money is better off in the mortgage or S&S ISA.

Any thoughts?

Trish1968

Hi stphnstevey

Thanks for your reply. I did know that Nationwide allow you to draw the overpayments but hadn't actually thought about it as a sort of savings account.

It is such a dilema with this topic. Our main aim has always to be to get rid of the mortgage asap and it would seem a better use of the money if we are paying 5.8% on our Mortgate and can only get around 3% on our ISA's. I know that we loose the ISA allowance but it still better at this current time.