WHY do you want to be Mortgage Free?

bexster1975

I would like to add, as the OP decided to play " devils advocate" in the original post, that " investing for a future date" in all of its forms, is ultimately a gamble. Paying off your mortgage isn't. Anyone who has read any of my posts knows that I believe contributing to most pension schemes, including the state pension we are obligated to pay into, is the biggest gamble of them all. If recent history has taught us nothing else, it is certainly the case that we can see pension schemes are often built on sand and can have goalposts moved on a whim. As for the state pension, I suspect anyone under 45 has little to no chance of ever receiving one in their lifetime. The ultimate Ponzi scheme. People will doubtless jump on this as they have before. The fact remains that paying off a mortgage is a certainty, investing via pensions is an exercise in optimism at best. The " free" money when invested is certainly no longer " free" when you claim your pension ( in terms of tax). I am in favour of making provision for later life, but not over obtaining certainty of housing in the mid-term.

Bexster

Happier_Me

Ideally it shouldn't be an either/or decision. We both pay into pensions and we are on track to have in excess of £30k per annum in joint after tax retirement income from the age of 55. Although this does rely on the state pension so I'm hoping your predictions don't come true Bexster:D.

But we also overpay our mortgage by a significant sum. Just over one of our net salaries is dedicated to paying off mortgage and 0% credit cards. We're on track to clear everything by July 2019. We have never 'lived' to our means and the decision to overpay at the rate we do is for a couple of reasons:

• I need a career change, not just a job change. I've tried the job change and it doesn't work. With my mortgage gone I can afford to make some life changes without risking my family's security.
• I am concerned about lifestyle creep. We both earn okay salaries but we're not high earners. We live on an amount which is similar to our planned retirement income as a family of 4 and we live very comfortably. We could spend more but it would get wasted on new cars, restuarant meals, takeaways and junk no doubt. I don't want a significant lifestyle change in retirement if I can avoid it so it's important we keep a handle on our monthly spending.
• For us its balancing the long term with the short term. My priority is to address my work situation and soon. I wouldn't feel financially secure enough to make that change if I paid our spare cash into a pension that couldn't be accessed for at least another 13 years.
• We are not 40% tax payers. If we were that would be a game changer.

The vast majority of us know that historically investments have out performed your average mortgage interest over time. On paper I would be better off had I invested and not overpaid in the last 5 years or so but I'm happy with my choices.

Zola.

Good thread. The thought of a paid off home is certainly idyllic and exciting.

We paid about £4000 in mortgage overpayments in the last year, but have stopped any future ones for now, and entirely focused on building our S&S ISAs at this time.

We are young in the game and have another 22 years to run on our mortgage. I did some number crunching and made a spreadsheet to see when our combined investment balance could potentially meet our mortgage balance (assuming 5% growth each year), and our mortgage rate staying the exact same..

The crossover point where the mortgage balance and investments met was after 8 years. Of course this is not scientific and a sure thing, but for us its a thing to work to. It may come sooner, it may come later.

Building up a sizeable nest egg would help protect us as well from things like job losses etc. Throwing the kitchen sink at the mortgage may not be ideal unless you have a lot of liquid cash ready, if the proverbial hits the fan. Once that money is with the mortgage folks, you cant get it out if you find yourself in other financial trouble.

alright_dave

I want to be mortgage free so it gives me the free time to retrain, I'm 31, hate my job but the money is great for someone with no skills. Not having to pay it will give me an opportunity to go to uni and actually do something I find interesting,

Looking at around 3 years to be MF.

Stave_74

As with any loan, it needs to be repaid at some point.


Being mortgage free should be the goal for everyone with a mortgage.


If you can afford to do it, do it...!