Should I pay off my mortgage discussion

Welshlassie

I'd be inclined to hang on until October and then pay it off once your bonus has come through. You could always find one the top paying savings accounts to put the matured saving account balance into for the 3-4 months until your bonus comes through. You never know what is going to happen in the period between July and Oct.

Well done on getting to this point though.

stphnstevey

Am i right in thinking there is no benefit to reducing the term with a interest only mortgage - only with a repayment mortgage?

Welshlassie

stphnstevey wrote: »

Am i right in thinking there is no benefit to reducing the term with a interest only mortgage - only with a repayment mortgage?

Only that it means you've got less time to find the capital element. You will actually pay less interest in the long term if you do have the capital available at the end of the reduced term.

rainbow143

I'm in a similar position to PGSchick. Stuck in a fixed rate mortgage until May 2012 - 6% rate costing me £2633 per year in interest. I still have 5 years left to pay after 2012. Have got enough in ISA's to pay the lot off - and currently only getting £100 interest a month on that. It's very tempting to pay the mortgage off. Have no other debts and can save £1100 a month if I didn't have the mortgage - so could soon have some savings behind me. Not too concerned about not having money to fall back on as I could always get another loan if I really needed some money. Just reluctant to lose my ISA's!
Any advice please?

jamesd

setmefree2 wrote: »

They are wrong -see Niall Ferguson The Ascent of Money "Safe as Houses" Page 263

That looks like an American book about the American stock and housing markets? Is it available online somewhere so the data sources can be checked, like the Pensions Commission reports?

With respect to Mr Ferguson, I think I'll choose the reports of the Pensions Commission based on UK statistics over his book. The TV series was interesting as background material, though.

setmefree2 wrote: »

The overseas markets may perform better than the UK indexes but what about currency movements? Who wants to bet their shirts (or their future retirement/ financial security) on movements in the currency market?

Anyone with much knowledge of investing because the UK market is a small proportion of world markets and not one of the more rapidly growing ones. You normally want to put your money into growth areas while investing before retirement. Growth areas also tend to have increases in the values of their currencies as the value of their economy increases over time. In my case something around 80% is outside the UK. Depending on the fund, some will use hedging to reduce or eliminate fluctuations in value due to exchange rate differences. Alternatively it can be used to try to improve returns, investing more outside the UK before an expected drop in the value of the Pound and hedging or returning to the Uk before expected rises.

As you get closer to retirement you'd want to start switching investments to those that are tied to the currency that you'll be using in retirement, if you plan to buy an annuity particularly. If you plan to continue investing less of a switch might be needed.

stphnstevey wrote: »

Am i right in thinking there is no benefit to reducing the term with a interest only mortgage - only with a repayment mortgage?

Reducing the term won't change the repayment so little point. The reason people reduce the term is to increase the capital repayment rate and hence make higher monthly payments. That's useful if there are penalties for extra payments. With no penalties it'd be optimum to keep the required payments as low as possible and if higher payments are desired to do that as and when it's convenient under your control rather than as an obligation.

setmefree2

Hi JamesD

I doubt you and I will ever agree to be honest so it seems pointless to engage in any further debate. Niall was referring to the UK market. I can produce a lot of data that shows UK property prices have outpaced stocks in the UK but I can tell you don't want to know, so I will leave it there.

Good Luck with your investment strategy and I really do hope it works for you.

jamesd

It'd be interesting to know why the two disagree. The Pensions Commission report is available online so you might want to take a look at it to see what data sources it's using.

Jonbvn

setmefree2 wrote: »

Hi JamesD

I doubt you and I will ever agree to be honest so it seems pointless to engage in any further debate. Niall was referring to the UK market. I can produce a lot of data that shows UK property prices have outpaced stocks in the UK but I can tell you don't want to know, so I will leave it there.

IMHO, the difference between property prices and investments is marginal. As an example, we hold some shares that have gone up 50%+ in the last year. However, we also own a property overseas, that has increased in value twenty fold (approx.) in the last 9 years. In the longer term, for us they are both essential components in achieving sufficient long term wealth. Given this, we have put our money into both!

Maybe we're just hedging our bets?

jamesd

That seems like sensible diversification to me. You did very well so far on that foreign property!

Aless

There was an article in the Evening Standard yesterday that noted that people forget to take inflation into account when assessing property value increases. As an example the article said that, taking into account inflation, in took until 2002 for property prices to reach the value they were in 1989. Referring to UK property prices.

I guess that, as after 2002, there was low inflation and large increases in property prices the statistics for the most recent period might be a bit different but always interesting to be aware of this information.