Your Financial Setup

tara747

Assets: £72,000 in savings, final salary pension with low contributions (lucky me)
Debts: absolutely none
Salary: £37,000

marathonic

Minrich wrote: »

Get rid of debt ASAP , who knows whats round the corner

Completely disagree. Future nvestment returns are expected to be in excess of the interest rates on mortgages.

Also, if I happened to lose my job, I'd be much more comfortable if I had a £150,000 mortgage whilst holding a £100,000 diversified stock portfolio producing a 3% dividend yield than I would if I held a £50,000 mortgage but no investments. The latter doesn't offer much/any flexibility.

innovate

marathonic wrote: »

Completely disagree. Future nvestment returns are expected to be in excess of the interest rates on mortgages.

.

That's all very well if you are 100% certain you can still service your mortgage if for whatever reason your income stops, or if you don't mind having to sell up under pressure. If either of these apply, then by all means don't pay off your mortgage if you can make a bit of money from savings and investments.

Wilkins

Minrich wrote: »

Get rid of debt ASAP , who knows whats round the corner

What really matters is net debt. There is no problem in having £100k mortgage debt if you have £110k savings and investments. I'd rather that (in some circumstances) than be mortgage free with only £10k savings, especially if I could make a better investment return than I was paying on the mortgage. Flexibility and balance are pretty important.

115K

This discussion is making me think that we should definitely focus on saving rather than overpaying the mortgage.

innovate

115K wrote: »

This discussion is making me think that we should definitely focus on saving rather than overpaying the mortgage.

As has been commented before on this mater, there is no uniform "we", and therefore your conclusions may be appropriate for some but not for others. Nor does this thread have anything like a statistically relevant sample to draw any conclusions at all on best approaches for mortgage payments (or any other financial matters).

I'd hate to see a tear story when someone ends up unemployed, with negative equity and no choice but to sell their home because their savings were nowhere near to what they needed to survive with their house. "MSE told me not to pay back/reduce my mortgage when I could have done".

For some people, saving - or more likely, investing - instead of paying off their mortgage is the right approach. For others, paying off the mortgage is the better approach. For the vast majority, an in-between approach is likely to be the best option.

jimjames

Wilkins wrote: »

What really matters is net debt. There is no problem in having £100k mortgage debt if you have £110k savings and investments. I'd rather that (in some circumstances) than be mortgage free with only £10k savings, especially if I could make a better investment return than I was paying on the mortgage. Flexibility and balance are pretty important.

Very true. I've concentrated on investments rather than overpaying and my portfolio is now 70% more than the amount on my mortgage which still has 12 years to go. I could pay it off but then I'd be starting from scratch again and I'm confident I can make more than than the 2.29% the mortgage costs.

115K

innovate wrote: »

For some people, saving - or more likely, investing - instead of paying off their mortgage is the right approach. For others, paying off the mortgage is the better approach. For the vast majority, an in-between approach is likely to be the best option.

Yes, true. We have a very low rate on our mortgage at the moment, it's about 1.7% I think, so saving would be a better idea, I think? I'm fairly new at this saving idea but us only having £5,000 does not seem like a good idea to me.

jimjames

115K wrote: »

Yes, true. We have a very low rate on our mortgage at the moment, it's about 1.7% I think, so saving would be a better idea, I think? I'm fairly new at this saving idea but us only having £5,000 does not seem like a good idea to me.

It's really down to your attitude to risk. I wouldn't save instead of paying off mortgage but I do invest to do so. Getting a much better rate than 1.7% is likely to be hard at the moment especially if outside an ISA and therefore taxed.

The difficulty would come if you ever had no income and needed access to cash. It would be much easier to get to your savings than trying to take out a mortgage again to give you some money. But on the other hand with no savings you may have access to benefits that you wouldn't get with savings. Swings and roundabouts!

Almostdone_2

I have great respect for those who have saved so well on this thread ( kudos to the truck driver off travelling !) and on the DFW board where I have huge admiration for those handling difficult situations cheerfully and with great integrity.I like to leave short messages of support there, so this is a new username for a different subject.

Age 59,married,two children in their 20's established thankfully in their chosen careers

Joint

Liabilities -none,no mortgages,no debt,cards cleared monthly

Assets

Home: 4 bed semi on the outskirts of London

Holiday apartment/second home in Europe;£ 135,000 approx

Me:

Salary :higher rate tax payer

Two DB deferred pensions: will take these next year,almost certainly without taking the tax free lump sum.Income will be around 60% of current salary and will still be a higher rate tax payer

SIPP :£250,00 ( 20% fixed interest,10% absolute return,70% global equity funds)

ISAs : £200,000 ( 10k cash,otherwise S&S in a various diversified funds)

Shares : £90,000 in directly held shares,mostly built up since 2009.

Cash : £100,000 including an amount reserved to help daughter with house deposit when needed -son has already had his.

Wife:

Part time medical professional

Pension ;£15,000 FS at age 60

ISAs : £60,000 S&S,£25,000 cash

BTL ( no mortgage) :£130,000

Cash :£ 125,000 ( includes a recent inheritance -only my mum left now)

I hesitated before writing this .We live modestly but comfortably and know people who earn more but have less as they never got the saving habit.My wife likes to spend so I am the saver in our couple,but we have successfully taught both our children to respect money and avoid debt ( other than for home buying) like the plague.

I am over -engineered in terms of safety net ,but have always had a fear of having to worry about money and am hugely relieved and lucky to have avoided redundancy in my 50's.

We could of course live on less ,if required,The need not want mantra is an important one

In terms of mortgage,I had savings to cover the endowment shortfall and the cost of the holiday flat,but as I found myself still working I decided to pay this down in the last four years from earnings,which also got us accustomed to living off the income we will have in semi retirement ,as I will reduce my number of days next year.

Good luck to everyone.