Pay Off with penalty or not? 22 August 2016 at 6:37PM in Mortgage-free wannabe 2 replies 539 views

siovas

Currently due to retire and have enough of a lump sum to pay off the mortgage.
What are the pros and cons of being mortgage free against paying it off which includes a 3 grand penalty as we're on a fixed rate until 2019?
Cheers for any advice.

spendinglikemad

What I think is best is if you calculate what you will pay in interest between now and when your fixed rate ends in 2019 and see if that is greater than the penalty payment.

We are in a situation where we have more than the mortgage amount in savings but keep in the bank as the interest rates on mortgage vs savings mean its the better option for us to keep paying our mortgage rather than pay it off. Plus uncertainties about jobs means we want/need flexibility on what we do with the money - if its paid off the mortgage you can't get it back!

Very personal choice though - just do the calculations and work it out

siovas

Cheers, thanks for the point of view.