Should I pay off my mortgage?

nickyk_2

We're also wondering whether to keep a small mortgage going - to make it easier if we need to borrow in the future. Is this wise or should we just pay off and seek borrowing elsewhere if we need to?

fewcloudy

Neil_ABZ wrote: »

I like the fact that I have an overpayment balance that I could draw upon at my existing SVR of 2.5% should I need it so paying it off removes that option without having to remortgage should things go tits up.

Hmm, yes, I used to think like that too.
https://forums.moneysavingexpert.com/discussion/4910936


Has anything changed since that thread (serious question, I don't know).


fc

swindiff

As long as you can get returns on your money greater than the rate of interest of the mortgage why pay it off? Current account will pay 3 4 or 5% and are instant access. With a good credit history and a good LTV you can get a mortgage rate of 2%. Seems like a no brainer to stash it in high rate current accounts, and is what I am doing with my surplus cash.

bobbly

A few months later and my 2.5% mortgage is now down to about £2,000, so I was thinking about just paying it off and forgetting about it.

However, while looking at my account I noticed I have an overpayment balance of over £100,000 which I could reclaim at any time.

I quite like the idea of never having to think about it again, but on the other hand, if I did not pay it off completely then my ongoing monthly repayments would be less than £20 for the next couple of decades, and throughout that period I would be able to call upon that £100k if I need it. As others have pointed out, it would probably be a no brainer to take at least some of it out and stick it in a 3%+ current account.

What have others done in the same situation? Despite the above no-brainer, I'm still more inclined to just pay it off right now for a stress-free existence, but I'm worried I might later regret not being able to get hold of a guaranteed £100k without having to go through the hoops of applying for a new loan.

bobbly

So I decided not to pay it off completely. I've reduced the mortgage balance to £300 and asked Nationwide to recalculate my repayments accordingly.

I'll be paying the outstanding balance off at about £2/month for the next 15 years, and should (in theory!) have access to the £100k+ overpayment reserve at any time. Plenty of time to rethink things.

This is the first time my credit card balance has been greater than my mortgage. Certainly puts things into perspective!