Paying off mortgage

megadishu

We may have the opportunity to pay off our mortgage and I just want to check I am thinking correctly.


We took out a large mortgage but then paid it down to 100k immediately. We may get the choice of paying it off totally.


However, I think it is worthwhile keeping say 5k going so we can still use the drawdown facility if needed in the future. My thinking is that it is easier to keep a mortgage than to lose the facility and then have to start from scratch if we needed money in the future - for a new roof or any other costly event that we may not be able to predict.


All advice would be most welcome.


Thank you.

Thrugelmir

What rate of interest are you currently paying?

megadishu

2.75% is our current interest rate

Thrugelmir

Personally I would pay the mortgage off. Then budget my finances from there going forwards. Using the outgoing that was the mortgage to save into various pots. Cash, pension and ISA.

megadishu

I have had to give up working at present due to ill health. My thinking is that we might need money in the future and then I might not be able to get a (re-)mortgage if we need money??

Dave_the_Ginger_Cat

If it is a standard mortgage, it will make little difference between paying it off and paying it down to £5k, as any lender would look at affordability on a new drawdown

The only time I can see this would differ is if it is an offset, or if the terms of your mortgage specifically allow drawdown without underwriting.

megadishu

We are lucky enough that whenever we want to draw down we can do it immediately and do not have to ask the underwriter, so it is an immediate cash facility .... We have used it in the past when we invested in another property and it was sorted within 48 hours i.e. money in our account.

msmyth18

Why don't you reduced the mortgage down to say £25k and keep what you have left in a ISA. That way you have the money should the roof need doing