Should we pay off mortgage or keep a small one??

Hi! Sorry if this question has been asked hundreds of times before but I am so confused!! My husband and I currently have a £110,000 mortgage on a property in Surrey valued at £525,000. We are on a fixed rate mortgage at the moment which is due to end on 3/8/16. We are about to put our house on the market and relocate to the west country, we are confused as to whether it's better to completely pay off our mortgage or keep a very small one I.e £10k? What is the advantage of keeping a mortgage? I'm not even sure if our mortgage company will allow us to 'port' it to a new house anyway and if we move before our current mortgage expires we'll be charged a fee! What is the best thing to do, anyone any advice??? Thanks!:j

Replies

  • vb3dvb3d Forumite
    100 Posts
    Part of the Furniture 10 Posts Combo Breaker
    Forumite
    If you mean an advantage to have a mortgage as in helps with credit score or so, I really don't know.

    There is no easy answer to your question, as it is a personal reference.
    Personally I would keep a very low mortgage where I pay the lowest interest possible, and use the money I would be paying to mortgage to put into saving accounts with highest interest as possible.
    But still depends on the amount of mortgage.
    If interest is low but the amount is big due to expensive house I might be still paying more in interest than getting back from savings, so if you would do the same you need to calculate these figures and make a choice.
    The decision also depends on what type/size/location of a new house do you like to get next time, and whether getting it is possible without mortgage or not.
    I think becoming a mortgage free is a goal in its own, and would leave you with lots of cash from income that you can spend/invest, and definitely worth achieving in my opinion.

    I hope this helps
  • mikenolanmikenolan Forumite
    42 Posts
    Part of the Furniture Combo Breaker
    Forumite
    If your new house needs work doing to it then keeping the mortgage would free up some cash. You could look into offset mortgages and keep your money in the linked account to reduce (or eliminate) the interest you pay on the mortgage.
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