Pay off mortgage or buy 2nd house

robw123

We are 2 1/2 years through our first 5 year fixed rate term on our 35 year mortgage. Original amount owed £155k monthly payments of just under £800 and have over payed by the max of £500 every month since the start. If we carry on like this it should be payed off in about 12 years from the start (so another 10 from now). But by the time the first 5 years are up we should have aprox £125k left, but should also have saved up about that amount in savings... so...
Do you think it would be best to use savings to pay it all off then start saving again, or keep it as it is and buy a second cheaper home outright to let out?
Although im confident we will be able to keep paying what we do now for the next 10 years, im not confident we will be able to keep saving at the rate we are now, hence if we pay it off it might be difficult to get another big lump-sum together to buy a 2nd home.

AMILLIONDOLLARS

So have you figured in, if one or both of you dies? 5/10 years is a long way off, concentrate with what you've got now, unless you are the owner of an accurate crystal ball!!


AMD

robw123

Got life insurance and cant do anything about that.... whats wrong with planning for the future?
Ok, lets pretend right now I have enough in the bank to pay of my mortgage or buy a 2nd house, knowing I might struggle to save up a good amount again, what do people think?

AMILLIONDOLLARS

You'll have Life Insurance BUT no Life! Nothing wrong in planning for the future, but no one can tell you what will or will not happen 5/10 years from now. Just save and see what happens! Don't forget you might lose your jobs in the meantime, all kind of scenarios come into play.

AMD

robw123

Ok, your right. I haven't been on a "financial forum" before and thought i'd get abit of friendly advice on this specific senario, but as I cant 100% be sure that in 5 years or 10 years time I will be in this same position or even alive, I shant bother to think about it any more or plan things. Thank you very much for the invaluable advice.

StuC75

What many are suggesting is to get the Work \ Life balance in the right area.. Work to Live rather than Live to Work...

How much do you presently have in savings? if you reckon that in another 2 1/2 years your mortgage will be down to 125k (Is that with only regular payments or including the overpayments?).

Are you wanting to be a landlord with a second property owned outright- is that a good use of the capital that you have for a tax perspective? or would it be better to have a string of Buy To Let mortgages where the interest payments offset the tax liability but allows a steady portfolio to be built up??