What would you do?

paultither

My wife and I currently have a mortgage of £120,000. Our house is worth around the £250,000 mark.

We pay £680 a month in mortgage but have stocks and shares to the value of £180,000.

I have been contemplating this as my wife has recently set up a new business and she is struggling to contribute to the mortgage so money is a bit tighter than I would like.

Our flat rate mortgage is due to end its honeymoon period mid next year and I have wondered whether we should use £120,000 of our shares to completly pay off the mortgage. This is made even more tempting what with rising interests rates and the whole bank uncertenty thing (Northern Rock).

What would you do if you were in the same situation, struggle on paying the mortgage and ride the storm until the business picks up and keep the money invested in stocks and shares, or pay off the mortgage and leave £60,000 invested?

Waldir

I'd pay the mortgage. Peace of mind is best.

Telain

I'd pay off the morgage and pull out investments from the stocks and shares and put it into cash. Thats what i'm doing this week.

Moneygoes2money

I assume you have checked your mortgage terms and conditions to ensure you are allowed to make an overpayment without incurring an early repayment charge.

Also, what is the current rate of interest on your mortgage and is it fixed or variable? Many believe interest rates have peaked for the timebeing what with inflation falling and the current credit crunch crisis in the US (although when the next piece of economic data is published they'll naturally revise their forecasts)!

lolarentt

paultither wrote: »

My wife and I currently have a mortgage of £120,000. Our house is worth around the £250,000 mark.

We pay £680 a month in mortgage but have stocks and shares to the value of £180,000...............What would you do if you were in the same situation, struggle on paying the mortgage and ride the storm until the business picks up and keep the money invested in stocks and shares, or pay off the mortgage and leave £60,000 invested?

Presumably you are getting quite a nice sum in dividends from the £180K so you'll need to take this into account?

I think there are too many variables to enable one to make a 'right' or 'wrong' decision but if markets are stable and you still need to cut yourselves a bit more slack in your finances I'd probably consider a reduction in the total mortgage, say down to £80K which would still leave you £120K in stocks

robp

I would sell some S&S and either make regular overpayments, or as is commonly allowed, make a 10% overpayment per year.

I guess you have to decide which S&S to sell, and whether the time is right?

Nice to have the option though, and good luck with the business!

busy_b

I have a similar dilemma but on a smaller scale. I owe £36k and we are self employed and have savings now that would pay off the mortgage. Everyone seems to be advising me to offset my savings against the mortgage so that I still have access to them. It's all really confusing and even my Mortgage Lender is unsure how the offset works if you could actually pay off your mortgage in full. (I can't get a straight answer from them and they're a major bank).
It may be worth considering though ! Good Luck.

DickDastardly_2

Pay off the mortgage!!

ailuro2

I'm a big fan of paying off the mortgage, HOWEVER....only if it is financially wise to do so.

With the way the stocks are at the moment you might not get the best price for them. I'd wait until they came back up again then trade them in for a more secure method. Is your pension fund good? Have you both used up your full ISA allowance? etc.

savvykaz

Definitely pay off your mortgage - the financial security you'll feel will be worth it alone, I'm sure.

djbd1973

If the money you have in the stocks and shares is making more than the equivalent amount in your mortgage at your rate of mortgage then keep it there. Also as suggested, if there is a cap to how much capital can be taken off your mortgage i.e. 10%, then you may want to look at what fees would involve in wiping the debt out. If the mortgage is distracting the business activities then I personally would clear it to give a feel good factor and help with concentrating on the business solely but good luck with whatever you decide.