Paying off the mortgage - any disadvantages?

I have been overpaying my mortgage for about 5 years and now left with a balance of £7.5k. The rate is 1.49 above the base rate. We have this amount saved (and some emergency money) in a Santander 123 account paying 1.5% interest.

Logic tells me to pay the mortgage off and then build our savings back up, but I wondered if there were any disadvantages on doing this.

I know that years ago the banks used to keep your deeds safe as long as you had a mortgage with them, and it was encouraged to leave a small balance on your mortgage for this reason, but we hold the deeds ourselves.

Replies

  • fresh_cottonfresh_cotton Forumite
    40 Posts
    Mortgage-free Glee!
    Forumite
    Now that most land is registered, old style deeds are a lot less important.

    There is little doubt, that you could make the £7,500 work harder than the 1.49% you will save on your mortgage such as investments, pensions, stock and shares ISA - (financial advisors logic)

    But I think paying the mortgage balance off has other advantages - in terms of protecting yourself from potential further interest rises (maybe less of an issue in your case as the balance is so small).

    I personally just like paying my debts off first, and then building my savings (my grandmas logic)
  • clareskiclareski Forumite
    904 Posts
    Part of the Furniture 500 Posts
    Forumite
    Thanks Fresh Cotton, love Grandma's logic. My Nan had one of those old segmented money boxes with sections for gas, rent, food etc. Never spent more than she could afford. She gave the money box to me along with her savvy spending and saving advice.

    Wonder what happened to that money box? *off to Mum and Dads to see if it's still there!!
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