Pay it all off??

After thoughts/opinions please!
We currently have a balance of around £76k left on our mortgage. We are in the final year of a 5 year fixed rate at 2.59% and had always planned on paying off the mortgage with savings when the fixed rate ends on the 31st December this year. There is currently an ERC of 1% if we pay it off before this date, but we are earning virtually nothing on the savings we have (circa £10 a month) so we're thinking that, even with the ERC, it's worth paying it off early as we'll save for more in the interest charges than the interest we're earning. If we pay the mortgage off it will leave us with around £40k in savings, so we still have a good buffer as a backup.

I'm thinking that, financially, it makes sense, unless I'm missing something? Or does it make sense to wait until we don't have to pay an ERC?

Comments

  • Zola.
    Zola. Posts: 2,204 Forumite
    First Anniversary Photogenic Name Dropper First Post
    edited 15 February 2021 at 1:20PM
    Savings interest rates are so poor at the moment, you have a decent cash backup buffer... what age are you? What about job security etc?

    Do you invest in an ISA, or pension? If you have a sizeable amount in either, or both, it would be very tempting to kill the mortgage if I was you.  
  • 100% pay it off. You’ll be MF and have £40k savings still, that’s incredible. I would just take the ERC on the chin, that’s certainly what I will do very soon.

    Good luck to you x
  • I'm 37, DH is 41. I'm currently not working, DH is and is in a secure job. 
    Circa £75k of the savings is in an ISA but that only earns around £6-7 per month. We have £20k in a bond account that we locked in for 3 years 2.5 years ago which earns around £24 per month. DH puts 5% of salary into his pension each month which is matched by his employer. Our monthly mortgage payment is around £800 per month, so the plan was if we pay the mortgage off to put most of what we would be saving on the mortgage repayment into savings to start building that up again, and maybe look at investments as long term options for retirement.

    I've rang our mortgage provider to request a redemption statement so just waiting for that to come through and make sure the sums add up. Very excited at the thought of being mortgage free!
  • Zola.
    Zola. Posts: 2,204 Forumite
    First Anniversary Photogenic Name Dropper First Post
    edited 17 February 2021 at 1:53PM
    Exciting, you should definitely look to invest in a S&S ISA and into a pension after though.
    Being mortgage-free will be amazing I am sure!
  • You need to work out whether waiting till end of fix is cheaper or paying the 1% fine.
    Congratulations anyway on being "nearly" mortgage free.
    £52,365 owing December 2017.Now for the final countdown..1st Jan 2021 - £29,316 -- 1st Feb 2021 - £28,809 -- 1st Mar 2021 - £27,309 -- 1st Apr 2021 - £26,811 -- 1st May 2021 - £26,315 -- 1st Jun 2021 - £25,811 -- 1st Jul 2021 - £24,311 -- 1st Aug 2021 - £23,809 -- 1st Sep 2021 - £22,305 -- 1st Oct 2021 - £21,798 -- 1st Nov 2021 - £20,292 -- 1st Dec 2021 - £19,783 -- 1st Jan 2022 - £18,276 -- 1st Feb 2022 - £17,762 -- 1st Mar 2022 -£17,248 -- 1st Apr 2022 -£15,713 -- 1st May 2022 - £15,202 --1st Jun 2022 - £13,703 -- 1st Jul 2022 - £13,184 -- 1st Aug 2022 - £11,665 -- 1st Sep 2022 - £11,144 -- 1st Oct 2022 - £9,822 -- 1st Nov 2022 - £9,298 -- 1st Dec 2022 - £7,572 --1st Jan 2023 - £7,045 -- 1st Feb 2023 - £5,516 -- 10th Feb 2023 - £5,518 Overpayment Pot @ 10th Feb 23 = £5,518 / Primed = £0 / Actual debt = £0!!!! "Yes, the medicine is harsh, but the patient requires it in order to live, should we withhold the medicine?" Hopefully at zero mortgage debt by December 2022 or very close to it. Determined for freedom! 🍻🥂🍸🍹.
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