Pay off Mortgage or Keep Savings - Moral Dilemma

maths_max

Looking for advice on whether or not to pay off my mortgage? With the prospect of future interest rate rises on the horizon, should I quite while ahead.

My current mortgage rate is a low 1.45% (tracking the base rate) but I have the cash to pay of the mortgage (only just!). I have held out for over 2 years (obviously jumping from savings account to savings account :j). The thought of being mortgage free is liberating but the loss of the savings and the what if scenario always plays tricks on my thought process. Any comments good or bad would be appreciated.

Thrugelmir

How large is your mortgage?

How much are you making for leaving the money in your savings accounts?

Jonbvn

OP,

In a similar situation, where there is no definitive right or wrong answer, I would suggest you do both!

Just to explain. I recommend you use some of the savings to pay-off some of the mortgage.

Wobblydeb

It depends on what else you may need to spend it on in the next couple of years. New car?

Otherwise pay off an amount that still leaves you with 3-6 months worth of spends....

maths_max

Thrugelmir wrote: »

How large is your mortgage?

How much are you making for leaving the money in your savings accounts?

Around £65,000 outstanding. Making £100/£125 on various bank accounts by transferring (i.e. first direct etc.). and a few fixed term accounts 5% over the last few years but they have ended now hence looking at options.

getmore4less

IF rates go up chances are savings rate will as well.

As long as you can keep the money at a higher net rate cash is king.

you can effectively run your own 100% offset and play the mortgage is paid off game by using that money to make the monthly payments.

Then use the mortgage payment money to plan the long term future, pension other investments, or spend it.

AnotherJoe

OK I give up, why is this a "moral dilemma" ?

You also might want to consider other options than just these two and just one of the two.
You could do a part of both, or more into pension as a third option, which many seem to forget, focusing on clearing a mortgage at all costs and tuning down free employers and government money.

Presumably because the mortgage is visible and monthly and a pension is a scary thing thats years away. But i can confirm, eventually it creeps and taps you on the shoulder.

Senseicads

Yeah I think I'd consider an offset mortgage, and then just keep up the mortgage payments at the same rate as you have now. you'll lose a bit of money on the interest for the savings but you'd be so much better off in the long run!

getmore4less

Senseicads wrote: »

Yeah I think I'd consider an offset mortgage, and then just keep up the mortgage payments at the same rate as you have now. you'll lose a bit of money on the interest for the savings but you'd be so much better off in the long run!

Not if you can find savings at a higher rate than the mortgage an with base + 0.95% that will easy.

Then you are worse of by offsetting.

maths_max

Thanks to everyone who offered advice. It's certainly given me food for thought. Still not sure so will continue to seek comments on this forum and other places.

ViolaLass

I'd throw some at my pension.