Pay off mortgage or not?

Uffy64

Hello not sure if this is the right forum...

Just been left a lump sum in a will, which will pay off my mortgage (30K) We're on a fixed rate of 1.7%, so should i pay off the mortgage or not?

Any help greatly appreciated

Mortgage_Mark_2

Which is better, chicken or beef?

Nobody can possibly help you with this without further information. Is there anything else that you desperately need that £30k for at present? How much of a difference will having no mortgage payments every month have? How long is left to run?

Uffy64

Ok, so Mortgage ends Sep/2022, I checked the rate and its 1.6% variable.
We have been over paying for 2 years, so should be earlier finish.
Partners health not too good so thought paying off early could mean early retirement, in 4 yrs say. We do have some ISA's running, about 20k in there at present, which we will use when retiring hopefully.

Mortgage_Mark_2

It's still difficult to advise on what you would find better. Essentially you need to determine what financial impact it would have by removing your mortgage payment every month, but not having the £30k in the bank; and the flip side of what you could/would do with that £30k whilst maintaining mortgage payments for the remaining 8yrs.

It sounds very high level as if you're leaning towards paying it off, but I can't really tell you what you'd prefer. It's a nice problem to have, in a funny way, I guess!

Thrugelmir

If you can put the money on deposit and earn a higher rate of interest than you paying then do so. Otherwise repay the mortgage.

Cyberman60

Or you could do as I do which is to have an offset mortgage whereby the mortgage is netted against savings, so I actually owe very little but have access to the cash until the mortgage has to be paid up, which I will eventually do by downsizing.

It's great for cash flow for regular holidays etc for a retiree like me on a small pension. Once you pay off your mortgage you lose that access to cheap cash flow, so I would advise against it.

ChopperST

Are you a higher rate or basic rate tax payer?

dimbo61

Now with the very limited info you have given I would pay off the mortgage!
Yes you might earn a little more before tax than you pay on the Interest on your mortgage but with savings rates Very low at the moment GET RID
If you have more than £16K in the bank the nice benefits people expect you to live off savings ( Again GET RID)
If you pay off the mortgage put the Mortgage payment into a regular saver each month GET RID
Lots of people would tell you to invest in stocks and shares which is great and can make money long term but for me clearing debts first is the way forward

getmore4less

check for any repayment penalties.

Clearing the loan free up around £350pm

If the plan is to retire soon I would set up the finances as if you had retired to see how you manage on the new income, it might be that it is too tight and an extra year working will make things better.