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Invest to clear mortgage or overpay?

edited 27 September 2018 at 5:10PM in Mortgage-free wannabe
1 reply 455 views
marco_79marco_79 Forumite
234 Posts
Part of the Furniture 100 Posts Combo Breaker
edited 27 September 2018 at 5:10PM in Mortgage-free wannabe
Hi all,

I’m saving aggressively in a S&S ISA with a view to paying off my mortgage when the fixed rate ends in January 2023

I’m currently paying £1200 per month into my S&S ISA risk level 5. Balance just shy of £16k at the moment. Would I be better maxing overpayments into the mortgage as I go to reduce investment risk and interest payments or leave it mounting up in the ISA and pay it off in the one go at the end of the fix? The sole purpose of this saving is to eliminate the mortgage. I’m limited to 10% overpayment PA with Nationwide.

I want to get rid of this mortgage in the shortest amount of time possible and could even supplement the savings further if it would make a tangible difference.

Any help greatly appreciated.

Mark
Smile and be happy, things can usually get worse!

Replies

  • edited 27 September 2018 at 7:37PM
    robomomkeyrobomomkey Forumite
    7 Posts
    edited 27 September 2018 at 7:37PM
    Hi

    This will entirely depend on the performance of the market, and where you’ve invested.

    If the investments realise a higher % than the mortgage rate then you’re better saving in the isa.

    For my 10 pence, I would save hard in the isa, and invest this in etf’s or mutual funds as opposed to individual shares. I say this, because this is exactly what I’m doing, year to date up at 9% growth, and my mortgage is 1.99%.

    As background the American S&P 500 index (us version of the ftse100) has averaged somewhere between 7-10% over the last 90 years, google it. Then google s&p 500 etf, there are loads, and check out their performances.

    Then look at the performance after 2008, the last crash, to understand the risk and how things can go down, but also note that but around 2012 it’s recovered and by 2018 it’s significantly up.

    This entirely depends on your attitude to risk.
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