is it best to clear mortgage when deemed as self employed

Orby

Hello everyone.


Just seeking people's advice due to our indecisiveness and lack of financial nous.


We have a small mortgage of £10.000 on a property worth £120,000 bought 20 years ago. We have been procrastinating too much to move although we would like to move to a more rural environment.


We now luckily have an inheritance of 20.000 and are considering paying off the mortgage. However neither of us have a permanent job.


My partner aged 52 has been unemployed for 3 years, 2 years of which he was a carer for his parent. I left a professional well paid job in the public sector in 2014 due to intolerable stress. I have found no problem in gaining employment since then through agencies and have two periods of employment of 12 months and 3 months (current post) interspersed with 2 periods of signing on due to family pressures preventing work (these lasted no more than 10 weeks on each occasion) . My weekly take home pay is approx £700


However we have been previously advised that we would be better off keeping a mortgage in case we want to re-mortgage in the future or obtain a buy to let property. This advice was given when I had a permanent job.


I have now been advised I would not be able to get a mortgage without 3 years of accounts although I am not self employed. I think its unlikely we would get a mortgage in the future now without a permanent job and that paying off the mortgage is the best thing for financial security (who knows in the current climate how long agency work in the public sector will continue) Partner thinks we are better off keeping mortgage and trying to pay it off through my wages and supplement our existing savings. We currently have 7,000 saved.


Your views will be helpful in making a decision and move on from our procrastinating ways.

Thrugelmir

Clearing the mortgage just makes for one less thing to worry about. Having a mortgage makes no difference to obtaining another. Your personal circumstances will have a far larger bearing on the outcome. Why not clear it and continue to save. Then your options and choices are left open.

HappyMJ

Orby wrote: »

Hello everyone.


Just seeking people's advice due to our indecisiveness and lack of financial nous.


We have a small mortgage of £10.000 on a property worth £120,000 bought 20 years ago. We have been procrastinating too much to move although we would like to move to a more rural environment.


We now luckily have an inheritance of 20.000 and are considering paying off the mortgage. However neither of us have a permanent job.


My partner aged 52 has been unemployed for 3 years, 2 years of which he was a carer for his parent. I left a professional well paid job in the public sector in 2014 due to intolerable stress. I have found no problem in gaining employment since then through agencies and have two periods of employment of 12 months and 3 months (current post) interspersed with 2 periods of signing on due to family pressures preventing work (these lasted no more than 10 weeks on each occasion) . My weekly take home pay is approx £700


However we have been previously advised that we would be better off keeping a mortgage in case we want to re-mortgage in the future or obtain a buy to let property. This advice was given when I had a permanent job.


I have now been advised I would not be able to get a mortgage without 3 years of accounts although I am not self employed. I think its unlikely we would get a mortgage in the future now without a permanent job and that paying off the mortgage is the best thing for financial security (who knows in the current climate how long agency work in the public sector will continue) Partner thinks we are better off keeping mortgage and trying to pay it off through my wages and supplement our existing savings. We currently have 7,000 saved.


Your views will be helpful in making a decision and move on from our procrastinating ways.

If you sell up you must pay off the mortgage and with what you've written I would find it very unlikely you will get another mortgage.

You can get a mortgage without 3 years of accounts with a very large deposit. You might need 12 months of accounts instead.

So....depending on the interest rate you get on your savings compared to the interest rate you are paying on your mortgage will make the difference between paying it off now or not.

I personally pay less than 3% on all my loans....but I've also got tens of thousands in savings earning 3% or more in interest. Some earns 6%, some at 5% and some at 4%. It's not worth paying the loans off so I keep the loans and the savings. I could pay it all off tomorrow if I wanted but I won't be.

dimbo61

If you have more than £16,000 in savings you miss out on certain benefits so to me it sounds like a great idea to clear the mortgage with the money you have and keep the rest in cash ISA,s to cover any big emergency

HappyMJ

dimbo61 wrote: »

If you have more than £16,000 in savings you miss out on certain benefits so to me it sounds like a great idea to clear the mortgage with the money you have and keep the rest in cash ISA,s to cover any big emergency

The OP did say their weekly take home pay is £700 per week.

They also said they have £7,000 in cash and will be getting £20,000 inheritance and have a mortgage of £10,000. They would even if they paid off the mortgage still have over £16,000.

Thrugelmir

HappyMJ wrote: »

The OP did say their weekly take home pay is £700 per week.

They also said they have £7,000 in cash and will be getting £20,000 inheritance and have a mortgage of £10,000. They would even if they paid off the mortgage still have over £16,000.

To keep it beneath the threshold contribute to a pension.