a friend just paid off his mortgage

lalman

I have 2 btl mortgages and getting up to 40% equity and then switching to interest only.(currently at 37% and 26%).


The thought of clearing them off does appeal to me as all income apart from repairs would be mine... (and tax)


- but with income tax benefits just can't justify it.


I am buying a home next year that's 3x mine and my partners joint salary. I am really scared about the mortgage as the thought of owing that much money isn't something I ever wanted.

lisyloo

There's 2 things we're talking about here.
One is the psycological satisfaction of paying off the debt.
That's great but like others here I keep a mortgage to make money.

The other thing is saving yourself a is monthly payment which buys people a great deal of freedom and increases their options, so yes, that's something to be very happy about.

Sometimes paying off a mortgage does not mean saving a massive payment - it depends on how big your mortgage was - some of us are paying tiny amounts.

JP08

Paid off the mortgage on the old house. It feels, as per Tony the Tiger, "GRRRRRREAT" !

Got 905 days left before the current mortgage intended payoff day (10 yr mortgage, overpayments to the max allowed every month and will be slapping down the remaining balance the day the five year fix ends). Not that I'm counting or anything.

moneyistooshorttomention

I can understand the logic that goes "I'll get more in interest than I'm paying out for mortgage payments = so I wont". However, I doubt many of us are in that position - with the current miniscule interest rates.

Even allowing for that - I'd still pay any mortgage I had off fast (ie because of being worried some of my savings would be stolen by a bank bail-in).

In the event - I paid my mortgage off quite some years ago now. Basically, I was able to pay a large chunk off it (but not all) and then had to pay back the rest in a couple of little chunks. So there wasn't a big Defining Point when I went from noticeable mortgage to no mortgage overnight iyswim.

It was still a relief to be shot of it. I had always planned on paying it back as soon as I had a realistic chance to do so and managed to pay it back years early.

With that - I was a lot less worried about what would happen if I ever suffered from unemployment again (having had several bouts of that prior to buying the house). I could sit there and think "Doesn't matter that the Government is in the process of finding every excuse they can to pay less and less of peoples mortgage for them if they land up on the dole - mine is gone anyway".

Always always worth doing it if possible imo.

mystic_trev

ruggedtoast wrote: »

My mortgage is massive,and lurks over me at night like a British 1970's children's TV presenter.

Who did you arrange it through? Savills :eek:

lisyloo

However, I doubt many of us are in that position

But for those of us that are, surely you can understand why we'd want to make an almost completely risk free profit - and the risks are negligeable.

I'd still pay any mortgage I had off fast (ie because of being worried some of my savings would be stolen by a bank bail-in).

Sorry, I don't follow your logic.
Are you saying you'd take money from your savings to pay off your mortgage because you are worried that the bank might !!!
That sounds perverse to me.
Of course it's your choice to do as you please, but to turn down a profit for the reasons you've given is bonkers.

I was a lot less worried

If you have the money set aside then there are no worries anyway.

The only logical argument is possibly gaining state benefits, but some of us who have assets and are married that really isn't relevant to us because we wouldn't qualify anyway.

I'm pro-choice but I don't get the logic behind your reasons.

wotsthat

I could've paid off my mortgage years ago but decided not to.

Instead I remortgaged and purchased a second home after the crash now paying just over 2% which is fixed until 2018. Best decision I ever made and wouldn't have happened if the mortgage had been paid off.

Pre-crash I had about £25k of 0% credit card debt stashed in the mortgage earning 5.5% tax free for a few years and this was before balance transfer fees came along. Dramatically reduced the cost of providing housing for my family as £25k was a significant chunk of the outstanding capital.

Currently extended out to state retirement age to reduce capital payments and increase pension payments which are topped up by 40% tax relief.

There'd be a feel good effect from paying off the mortgage but at the cost of a diminished lifestyle, higher cost of accommodation, higher tax rate and lower retirement income.

I might pay it off earlier than aged 67 but if I do it'll be from tax free income partly earned by relaxing and simply allowing the debt to deflate away.

dano17439

I cannot wait until i'm mortgage free - if things go to plan it'll be in 5 years. The payment will coincide with me stopping childminder fees aswell, so i'll be £2,000 a month better off. Then into be time to dump the equivalent into pensions to reach the goal of having a £1m pot between us

Landofwood

dano17439 wrote: »

I cannot wait until i'm mortgage free - if things go to plan it'll be in 5 years. The payment will coincide with me stopping childminder fees aswell, so i'll be £2,000 a month better off. Then into be time to dump the equivalent into pensions to reach the goal of having a £1m pot between us

I see you're confident about reaching retirement age!

Make sure you have some money to enjoy your life until then

wotsthat

dano17439 wrote: »

I cannot wait until i'm mortgage free - if things go to plan it'll be in 5 years. The payment will coincide with me stopping childminder fees aswell, so i'll be £2,000 a month better off. Then into be time to dump the equivalent into pensions to reach the goal of having a £1m pot between us

Two of the things I considered when extending my mortgage to retirement age to allow for an increase in pension contributions were:

- tax relief on contributions (a use it or lose it relief)
- no matter what the mortgage rate it would, more likely than not, be less than even a modest investment return