Mortgage paid off, good or bad?

Moby45

My wife and I are both in our 50s and have paid off our mortgage, but because we have no children a friend has suggested we re-mortgage and make the most of the money tied up in the house ourselves. What do people think?

Well_excuse_me.

huh?
Do they mean equity release?
Or are you considering growing old with a mortgage around your necks?

AnotherJoe

What is it you aren't doing that you'd like to ?

atush

Huh? Do you have a pension? Do you have other relatives?

There are a lot of things for you think of.

For me, in your situation one would be- A, arrange to spend as much on me before death, and b, to have someone to leave money left over to (such as nieces, nephews, charities etc) now as you can.

Take the advantageous 25% tax free for your TFLS for

a, the post retirement splurge or for savings, or passing on wealth. Then for the 75% take as you need (taking care to pay as little tax as possible so keep your income under your PA, or under the BR tax threshold.


If I were you, i'd slam as much into a personal/work pension or Sipp for a retirement spurge if you can. It would get the immediate boost of tax relief so markets be dammed (although if you want to take the pension in full do look at tax rates for the 75% later on)

dunstonh

You are too young to equity release. A mortgage seems daft as over 25 years you typically pay back around two and half times what you borrow.

Bogof_Babe

Sounds to me like your friend is jealous of you being mortgage free.

saver861

Moby45 wrote: »

My wife and I are both in our 50s and have paid off our mortgage, but because we have no children a friend has suggested we re-mortgage and make the most of the money tied up in the house ourselves. What do people think?

Not sure why you would wanna do that?

Getting mortgage free is one of the first goals for many people. So not sure why you would want to do the reverse!

Your post really does not elaborate on your financial status other than to 'cash in' some of your bricks and mortar and have a splash. You might have a long time regretting that decision.

Sounds like you might benefit from a financial makeover and see where your priorities are falling short, if any. From there, make your decisions accordingly but I'm not sure I'd rely on your friend for financial advice!!!

Thrugelmir

Why become debt free to squander the money and burden yourself with debt into old age?

Triumph13

While it's almost certainly a bad idea to try to release equity now (unless by downsizing), it may make much more sense later on. A lot depends on what other provision you have made for retirement - eg if you have DC funds that you are planning to put into drawdown, then you might decide you can afford to go in with a more aggressive withdrawal rate and use equity release in your seventies or eighties to replenish the pot if it runs low.

nb73

If you have decided that you are going to spend your house, over how many years will you do that and how do you guarantee a roof in your dotage.

I guess it re-introduces an element of risk into your financial affairs. The risk being that you spend the money, can't meet repayments, and lose the house before you join the Choir Invisible.

Presumably that is a pretty small risk, and one which you have weighed up & feel comfortable taking?

dunstonh

I can imagine that in this scenario, equity release could be a very good idea in your mid to late 60s. With no-one to leave the property too, using the money for your own lifestyle could be a valid option. Not in your 50s when you are still working (assumption alert)