Should I pay off whole mortgage amount or save?

Marilynmonroe85

Hi all,

I've been a lurker for many years but this is my first post so please bear with me if it is in the wrong place.

Unfortunately I was recently diagnosed with cancer, which was a shock as I'm only 31. Thankfully my husband and I have life and critical illness cover and we have found out that I am eligible to claim on the insurance. They will pay out the whole cost of the mortgage which is £99'500. We currently owe £93'000 and after enquiring with my bank, we would not pay any fees for paying off the mortgage early as long as we can prove it is coming from our insurance money.

I am thinking we should pay off the mortgage, then I know that whatever happens to me, my husband and 2 toddlers are financially safe for the future. The money left over can help towards living costs while I'm off work having treatment and we can put the money we would have originally payed towards the mortgage in a savings account.

My husband though is questioning whether to put it all in a high interest savings account as he thinks we would earn more interest from it than the mortgage (which is 2.29% 5 year fix). I'm not too sure an account like this even exists or is even safe as I've heard about the £85'000 insurance limit per person per bank.

Please can someone give us some good advice, we really want to make the right desicion to give us the best investment for the future, whatever happens.

Many thanks in advance for your pearls of wisdom xx

SparkleFtb

So sorry to hear your having to go through this, as a mum my gut instinct would be to pay the mortgage off. You will be able to claim pip which will help you financially and as a mum I'd like to know my children have a stable home. However I am sure you will come through this and everything will work out well xxx

Moneyfordreams

I would pay off mortgage too... this would give you peace of mind whilst receiving any treatments. Then save mortgage payments monthly if your finances allow.
I wish you a speedy recovery

Tahlullah

I agree as well. For the stability of the family whatever happens, they have a home. I would pay off the mortgage.

Tx

AnotherJoe

My commiserations hopefully it all works out OK long term there's a lot of good treatment around now that wasnt there a few years back

5 minutes will show your husband he wont be able to get 2.29% on that sum of money (on £10k or £20k maybe you can beat it slightly ) and paying the mortgage off will help make his life easier as he takes time off work to look after you and kids plus ensure no ERC.

in order to get 3% or more on that £20k or so, that requires maintaining multiple bank accounts and juggling payments, does he really want that faff for a few quid when he's got more pressing matters to deal with?

POPPYOSCAR

I am another that would pay off the mortgage.

It is a wonderful feeling to know that the roof over your head is totally yours.

FIRSTTIMER

Pay of mortgage - it's best for the kids

jackieblack

Pay off the mortgage, peace of mind regarding your family's home will be priceless

All the best with your treatment

Lumanous

Hello MM, sorry to hear about what you are going through, fingers crossed for recovery for you.

I agree with most of the responses here I would go with your mortgage if you're comfortable not having access to this money, e.g. make sure you have enough otherwise for emergencies etc. which I'm sure you have already. Although there may be a minimal benefit off the interest IF you could find something giving a better rate than your mortgage is charging, but in my opinion that minimal benefit is nothing compared to the benefit of having that safety there for your family and removing the extra stress/hassle.

You don't know what the near future holds yet despite what is happening and if you put it into savings you'll still be working towards paying that mortgage off so it doesn't really fix the thing you have overhanging. Whereas if you pay off the mortgage, you can focus on what is important right now which is you, your health and your family.

Maybe then you can put the money you would normally be spending on the mortgage into those savings accounts but without the hassle, without the mortgage and without the worry that IF something goes wrong or you have a difficult time that you have to scramble to pay things off etc. 2 birds & all

Personal choice in the end but that's what I'd do (but keeping enough in savings/to one side for emergency, budgeting and a bit spare in case I had the opportunity to do something to support recovery or opportunity to do particular things with your kids etc.).

Hope all goes well for you x

genieuk

Thoguhts with you and your family.

I too agree with all the above comments pay off the mortgage one less thing to worry about.

All the best.

Marilynmonroe85

Thank you to everyone who has replied, you've confirmed what I was already thinking. I deal with all the finances/bills and think should the worst happen, he wouldn't really know where to start. So keep things simple, pay off the mortgage and save the payments we would have been making in an easy access savings account. It will be a nice feeling to know that my husband and children will be financially secure just wish it was under different circumstances. I also urge everyone to have or consider critical illness cover for their mortgage, you think these things will never happen to you but you never know what's around the corner. And also to see a doctor quickly if you notice any changes in your body, the sooner it's caught the better your prognosis.

Thanks again for all your support, I really appreciate it xx