Explain to me Why its Good to Pay off Your Mortgage quickly!

Kaz2904

You did say though that people who pay off their mortgages are being frugal. Frugal is often a term used to say "mean". Many of us who are trying to pay off our mortgages are not frugal or mean or tight or whatever others wish to call us (I don't mean you now btw!).
Most of us go on holidays, we get work done to the house, we have savings and investments and we strike a balance. I personally just try to limit the amount of [EMAIL="!!!!"]!!!![/EMAIL] that I buy. I prefer to buy more expensive furniture as I found to my cost that cheap stuff does not last.
I would say (and forgive me if I'm wrong) that you would have been paying into your mortgage in the days of hideous interest rates?
I was too young to be aware of money when these rates were going on. I remember spending a few Saturday afternoons sitting in the car when I was young while my Mum went into all of these shops that I'd never been in (Building societies). When we asked her what she was doing she said she was trying to get a new mortgage. We didn't know what one was.

I have been in a position where I was working 3 jobs and I had no money. We didn't have a bean and yet we still went out and bought [EMAIL="!!!!"]!!!![/EMAIL] and wasted food. We were far more wasteful then than we are now and I think that we probably spent more then than we do now.
Although our wages go every month we pay almost double what we should to our mortgage.
We have had to take money from our savings in order to get some things done but that is the reason we save in the first place.
My children both have pensions as I have learnt the beauty of compound interest. I pay £25 a month into their pensions and they will have a reasonable pot when they get to retirement age.
DH does not have a pension so we need to be very inventive to get enough of a pot gathered up to support us both. We have 35 years to save enough. This means that we need to fill our ISA's and get our mortgage gone.

Most of all I begrudge paying out money I don't have to!

beachbeth

Kaz2904 wrote: »

I would say (and forgive me if I'm wrong) that you would have been paying into your mortgage in the days of hideous interest rates?

Yes! Don't remind me! We bought our house in 1985 and I worked for a bank at the time. Once you had worked there 2 years you could get a bank mortgage which was 5.5% and this seemed like a dream mortgage to me! I think the rates at their height were around 14% (forgive me if Im wrong, I just remember them being high!). This was one thing that put us under pressure at the time. I left the bank to have kids so never got the mortgage.

When I say 'frugal' I certainly don't think of this as being mean. We are frugal in lots of ways - eg we don't have a newspaper(although this isn't exactly a hardship), use energy saving light bulbs and try to use as much electricity on economy 7 as we can. I think this is frugal rather than mean.

When we got our mortgage you had to go cap in hand to the building society and ask very nicely for a mortgage and the advisor would look at your income and savings and then decide if he would give you one!!! Not like now where they throw money at you!

Thanks for your opinion Kaz2904.

Kaz2904

beachbeth wrote: »

We sat down with a pensions adviser a few years ago and he said that we would pay £X per month and when my husband retired he would get £X as a pension. This was all well and good and I asked him what would happen if my husband died or if we divorced. He looked surprised (obviously no one had ever asked him this before!). He said if we divorced then hubby would take his pension with him and if he died then it depended whether he died before the age of 65 when he collected his pension or whether he died after.

If he died before, then I would get the lump sum or the pension. But if he died after then the pension would die with him. The adviser said "Look on the bright side, why don't you!". I was quite annoyed because surely you have to look at all scenarios before taking something like this on? I thought that it was grossly unfair that just because I stayed at home looking after the kids that I wouldn't get any of this pension if hubby left me or died at the wrong time! The menfolk in his family have all died around the age of 65 and he keeps saying that he will do the same!!!:cool: The whole thing just seemed so dodgy that we didn't take the pension out. I don't know if pensions still work like this now?

So you asked and were not given very good advice. Now really you should always plan for the worst case scenario ie, you will get divorced the day before dh retires or he dies and leaves you without his pension entitlement. It is always really important that you are both protected for the future.
Just because he earns more than you doesn't mean you can't both have a pension.
I think the website that I looked at a long time ago to show me what I would need and how much I had to save to get it was www.fool.co.uk and it would be in the pensions section probably.
At least you are asking questions to try and boost your awareness.

BTW, I think it's good for students to work their way through university as it gives them motivation, something to put on their cv for the future and maybe a job for when they graduate if they can't immediately get work in their chosen field.
Some students are even able to come out with a positive balance when they leave uni- and at least they can't be at the pub all the time blowing their overdrafts!

djbd1973

Kaz2904 wrote: »

I think the website that I looked at a long time ago to show me what I would need and how much I had to save to get it was www.fool.co.uk and it would be in the pensions section probably.
At least you are asking questions to try and boost your awareness.

Here is one of the pages that Kaz may be referring to. Was looking at this earlier myself -
http://www.fool.co.uk/news/retirement-pensions/2007/09/28/how-to-double-your-pension.aspx

Thanks Kaz

noh

maxmycardagain wrote: »

..................savings are the excess of a salary, if that salary has no excess you cant possibly have savings or pay into pensions, which in turn are mainly pots of gold for big fatcat layabout company bosses to rob.

Another sweeping statement that has no basis in fact. I suggest you do your own research.
Savings are an excess of income over expenditure. It is often possible to modify the level of either or both to achieve some level of saving at some point in your life. It just takes the will to do so.

Nigel

noh

beachbeth wrote: »

I don't read newspapers. They are all total rubbish! You say I like making sweeping statements but........

Another sweeping statement? or an attempt at irony?

Nigel

maxmycardagain

noh wrote: »

Another sweeping statement that has no basis in fact. I suggest you your own research.
Savings are an excess of income over expenditure. It is often possible to modify the level of either or both to achieve some level of saving at some point in your life. It just takes the will to do so.

Nigel

your wrong, it doesnt take the WILL to do so, it takes the MONEY to do so, the best will in the land cannot create wealth....


Its the "possibility of modifying" ones spending that makes me chuckle, rock bottom is rock bottom, also pertinent is the fact those who have never had incomes which leave no excess rarely have conventional debts, because conventional lenders wont lend, hence my mum and dad had no credit cards, no bank loans, and no mortgage, they were not seen as safe to lend to, hence, ironically they couldnt owe much!

but then again, as someone already said, as they lived/live on a council estate they must be bone idle day-time tv watching scum.........

setmefree2

Hi Beachbeth,

I do think you have a point... If I had a crystal ball that told me I wasn't going to live long, it would be pointless paying of my mortgage & paying into a pension - I would spend the money on good times :j_party_and my insurance would pay off the mortgage when I'm gone!;) Equally, there are things that you can do when you are young that you can't do when you are older....Travelling is one - even when you are fit, travel insurance for pensioners can be hideous.

It might be that your husband could benefit more by working less now. It's a very personal thing, isn't it? Wish I had a crystal ball 'cos we've been over paying our mortgage 5 years now and I would be pig sick if I dropped dead tomorrow!

noh

maxmycardagain wrote: »

your wrong, it doesnt take the WILL to do so, it takes the MONEY to do so, the best will in the land cannot create wealth....


Its the "possibility of modifying" ones spending that makes me chuckle, rock bottom is rock bottom, also pertinent is the fact those who have never had incomes which leave no excess rarely have conventional debts, because conventional lenders wont lend, hence my mum and dad had no credit cards, no bank loans, and no mortgage, they were not seen as safe to lend to, hence, ironically they couldnt owe much!

but then again, as someone already said, as they lived/live on a council estate they must be bone idle day-time tv watching scum.........

Of course it takes money to do so I didn't say otherwise but the will to save has to be there as well. I know many people who have an "excess of salary" as maxmycardagain says but have no savings.

Nigel

SoozyJ22

It's all about balance really and planning for all possible outcomes. On one hand I've been in remission from cancer for 2 years and my mum died of cancer at 49, so I have all the 'what if I don't live to retirement' thoughts. On the other hand my mum's parents are in their late 80s and still going strong and my great-grandpa (mum's grandfather) lived to be 100, so there's no way I can risk not setting myself up for retirement. So I have to cover the possibilities of living for not very long or for another 70 years.

I pay into my company pension and my employers match my contributions. I always use my full cash ISA allowance every year. I have other savings too - for holidays (I'm off to Canada and the US next week), new car when needed, house improvements etc. And finally I'm trying to make the maximum repayments on my mortgage so that I can pay it off by the time I'm 35 and then start working part time. This will really add to my quality of life as I get tired very easily now. Yes, there's a risk that I won't live that long but it's much more likely that I will and that 5 years of being economical will reward me with much better quality of live for a lot lot more. Even if I were to die (god, this is morbid) I wouldn't see the money as wasted as it would all go to my brother anyway and I'd want to know he'd be taken care of. It's the same with the pension, any money I put in now would all go to him if I were to die before retiring anyway so I don't see that as wasted either.