Savings v Mortgage Free

gregharts

Not sure this is the right place for this but I'm wondering which is the most sensible option.

So in approx 3 years time there is the possibility that I will be in a position to pay off my share of our mortgage (me and my partner have a 50% interest in the mortgage). It will take a bit of belt tightening over the next few years but I think it's feasible.

The mortgage will be approx £65k which I should have but approx £40k of investments and the rest in savings earning little interest.

My question is considering that the investments are in AXA and Phoenix, both fairly reliable and which I get approx 5% in dividends each year, is it better to keep the investments and the mortgage as in essence the dividends % are greater than the interest on the mortgage?

My other idea would be to keep the mortgage and then transfer the shares into a SIPP therefore getting the tax relief.

I like the idea of being mortgage free but then I also like the idea of having savings / something to live on when I retire...

Thanks in advance

Greg

dark^knight

Good question.

There is no right or wrong answer, just what you feel most comfortable with.

I would say take advantage of the saving rates, but also overpay small amount on the mortgage as well. This way you will still be reducing the mortgage over time, and in time you can use your savings to pay off the mortgage.