Do I save or do I pay off my mortgage ??

Alexland

I can't help much with dating advice as I have always tended to pickup partners from being places such as sharing accommodation at university or working with them. It's always been an extension of already knowing them and things getting a bit more serious after a few months. I once accompanied a friend to a 'singles night' at a local golf club and it was an awful cringeworthy experience. It's probably harder to find a partner in a pandemic but my advice would be to just get out there and take opportunities to meet people with a bias to saying yes and see where things go.

In terms of investment versus mortgage repayment if you are going to run an interest only mortgage it might be better to have as late a mandatory repayment date as possible. When we recently switched our modest 20% mortgage to IO to invest more it was a good time to reset the term back to 25 years to give some flexibility to withdraw from the investments while the stockmarket is good. If you are now down to the last 15 years it might be worth doing similar next time you fix the rate etc.

You might also want to consider if investing more via your pension then using the tax free lump sum to repay the mortgage might be a more tax efficient way of building up the repayment pot. Still pension rules may change in future. Consider how vast your overall investment are likely to be at the point of repaying the mortgage as if it's too tight you might just be better making normal mortgage repayments as a shortfall could become a problem.

whatstheplan

Like you I'm living solo.  I'd switch to a repayment mortgage.  If you have the money to do it, you could consider making overpayments to pay the mortgage sum down more quickly.  I have BTLs (rentals) that are on interest only mortgages because I look upon those properties as a business to generate income and don't intend to retain them (except one) into my retirement.  However when it comes to my own property I'm more comfortable repaying the capital sum.  And as others have touched on, it gives a sense of security when you get older i.e. you have a roof over your head that's bought and paid for, so no having to worry about mortgage or rental payments into your old age.

I'm similar to to you in that I'm not completely settled where I am.  So I have no intention of significantly upgrading the property in terms of swanky new kitchen and so on.  In reality you don't get that much of that money back if you sell, if any.  However I obviously ensure the basics are done i.e. the material of the building is maintained e.g. roof eaves painted, roof and grounds maintained etc.

I think, at 45, you're doing the right thing in starting to think about your future.  Some people roll their eyes when you start talking about financial plans for your older years, however I'd rather be in that camp than those that spend as they earn, perhaps don't have any pension provision and so on.  Hopefully we all reach 60+, so surely it's better to have prepared financially.

chelseablue

Sorry to jump on your post but thought it might be worth asking advice on my situation here as its also should we overpay or invest? 
I'm 37, husband is 31 we have a mortgage of £205,000 with 27 years to go and the interest rate is 1.79% until 2023 
Am now in a position to overpay £300-£500 a month or would it be a better idea to put this in my S&S ISA? 

MX5huggy

chelseablue said:

Sorry to jump on your post but thought it might be worth asking advice on my situation here as its also should we overpay or invest? 
I'm 37, husband is 31 we have a mortgage of £205,000 with 27 years to go and the interest rate is 1.79% until 2023 
Am now in a position to overpay £300-£500 a month or would it be a better idea to put this in my S&S ISA? 

Depends on your attitude to risk. ISA should beat mortgage overpayment, but if in 2023 interest rates are 5% and stock markets are 20% down. You might wish you had paid off mortgage. I have 10 year fix (18 months in) repayment mortgage, at 2.79% then another 7 years. I’m not over paying I’m going hard at pension payments. But when my fix is finished I’ll only have a fairly small outstanding balance, which I could go hard at if I needed to. 

thegentleway

MX5huggy said:

chelseablue said:

Sorry to jump on your post but thought it might be worth asking advice on my situation here as its also should we overpay or invest? 
I'm 37, husband is 31 we have a mortgage of £205,000 with 27 years to go and the interest rate is 1.79% until 2023 
Am now in a position to overpay £300-£500 a month or would it be a better idea to put this in my S&S ISA? 

Depends on your attitude to risk. ISA should beat mortgage overpayment, but if in 2023 interest rates are 5% and stock markets are 20% down. You might wish you had paid off mortgage. I have 10 year fix (18 months in) repayment mortgage, at 2.79% then another 7 years. I’m not over paying I’m going hard at pension payments. But when my fix is finished I’ll only have a fairly small outstanding balance, which I could go hard at if I needed to. 

It's unlikely interest rates will jump to 5% all of a sudden. However investements could drop by 20% depending on equity exposure. Paying off your mortgage is the safe option. You get a guaranteed rate of return. However, interest rates are very low so it makes sense to invest for better returns. As long as you understand that investments don't have a guaranteed rate of return. Therefore you need a 'back up' plan to pay off your mortgage. This can easily be achieved by switching to a repayment mortgage.

chelseablue

Thank you, I'm on a repayment mortgage. In that case is it still better to invest while mortgage interest rates are low?

enthusiasticsaver

MissProcrastinator said:

I am in need of some expert advice. I have money in stocks and shares ISA's which is increasing in price, but it is just there and I never dare touch it (especially under the current volatile times).

I have a mortgage but interest only.

The money I have in stocks and shares could pay off my mortgage, however, I have no dependents (and never will) therefore putting the money into bricks and mortar seems like a waste. I appreciate that in 15 years time, when my 25 years mortgage comes to an end, the bank will ask me to pay off the house or sell it and leave. 

The house I live is not in bad 'nic' but I know that many people, by now would have been through the house and updated things, especially the kitchen and bathroom. This work wouldn't be cheap (probably about £20,000) and I'm loathed to use my money for this. It will add value to the house, if/when I sell it, but not enough to break even. 

In my mind I am constantly flitting between paying off all/some of the mortgage, changing to a repayment mortgage, having the house updated, and doing nothing. When I moved in 10 years ago, I hadn't planned being here alone. I thought that I would have moved in with someone else or they would have moved in with me, and we would have shared the decision, but at 45 years old, I have realised that may not happen.

Hoping for some sensible advice (that is not clouded by emotions)

There are a few things I would address in your post and the fact you have no dependents or partners has no bearing on this. 

Improving houses is not just to increase sale value but to give you a nicer place to live.  It would seem to me to be a waste to invest for the future but not improve your current living conditions  but if you are not bothered then this is totally a personal choice as you are right that very few home improvements add value but they do usually make a place easier to sell. 

You are investing but why are you investing?  Is this for retirement (early retirement?) If so and you intend staying put in your current house then overpaying the mortgage or changing to repayment gives you security and means that you will need less in terms of retirement income.  For most of us repaying our mortgage is an emotional decision rather than financial in that it secures the roof over your head and you have to live somewhere.

At some point the house will either need to be sold or the mortgage repaid so having a think about where you see your future going is critical before making your decision as to whether you carry on investing spare money or start to repay the mortgage. In these days of low interest rates it makes sense to invest either in your pension or stocks and shares isas as financially that will probably give you a better return but with no guarantees.  Repaying the mortgage in stages is a  good idea though just in case the finish date coincides with a stock market dip and you are forced to sell investments at the wrong time. Of course if you intend to sell before the mortgage finish date you can just leave it as it is.  

I think you need a plan of how you see your future (with or without a partner) before making a decision or you could hedge and go 50/50 so maybe changing to repayment mortgage and continue to invest but a lower amount. What your plans are depends on whether you see yourself working until NRD or would like to take early retirement or go part time.   Whether you will stay put in your current house or move to another area (either cheaper or more expensive) and your ultimate financial goals and how your investments and house fit into that. 

thegentleway

chelseablue said:

Thank you, I'm on a repayment mortgage. In that case is it still better to invest while mortgage interest rates are low?

when rates are low yes, but what is your plan if interest rise?

L9XSS

To the OP. I think you need to have a balanced portfolio (both financially & emotionally LOL). Interest rates have historically never been this low, many on this forum were maybe paying 15% plus in the 1980s early 1990s I know I was. In my view, switch to a repayment mortgage so that eventually you own your home. Improvements to your decor can be made over time. Continue with your investments don’t forget pension particularly SIPP alongside a company pension? For both the tax advantages and company payments (free money). Finally a soulmate, other half, whatever, take your time, love will find you. You may need to nudge it with dating sites, hobbies, groups that you may join. Be kind to yourself.
dont get stuck in the paralysis of not being able to make a decision.......

enthusiasticsaver

chelseablue said:

Sorry to jump on your post but thought it might be worth asking advice on my situation here as its also should we overpay or invest? 
I'm 37, husband is 31 we have a mortgage of £205,000 with 27 years to go and the interest rate is 1.79% until 2023 
Am now in a position to overpay £300-£500 a month or would it be a better idea to put this in my S&S ISA? 

Do you see yourself still wanting a mortgage in 27 years? 

As the rate is so low I think I would opt for investing either in your stocks and shares isa or your pension or maybe go 50/50 so £200 overpayment to mortgage and invest £200. If I remember rightly though did you not sell your  investments early last year before Covid or am I thinking of someone else?  If you are the type of person who gets edgy about market movements that would indicate you are quite risk averse.  Our investments plunged by about 10-15% last March due to the pandemic and that is a low risk portfolio.  It had regained its value by May though and as at yesterday the annual return is + 15%. Anyone who is risk averse is better off repaying their mortgage instead of investing or maybe needs to look at what they are investing in. 

As I said to the OP though in most cases at the moment repaying the mortgage early is an emotional decision given it gives you a secure roof over your head. In general financially it would pay to invest instead but there is a risk in that no investments are 100% guaranteed to grow  whereas your mortgage will definitely need to be repaid at some point.