Was Mortgage free the right move

Barmymick

Hi all, due to interest rates on savings being poor, my wife and I decided to pay off our mortgage with the savings we had. Now we are left wondering if this was in fact the best thing to do at mid 50ish, as it will take a few years to replenish our savings to its former glory. What are your thoughts please?

MFWannabe

For me it would definitely be worth it; so that I actually owned my house and didn’t have to pay a mortgage each month 
You’ve done it now so just channel your mortgage payments into another area; I think if you look in the Savings board there’ll be plenty of ideas of ways to invest etc 

ACG

There would have been 3 options:
1) Save,
2) pay off mortgage,
3) Invest (pension, Buy to let, stocks/shares). 

If the mortgage was at a higher interest rate than a savings account then, financially it was probably the right choice. But there may have been a better option with investing. Although I suppose as your expenses are now lower there is now an argument that you can afford to put more into pensions which is probably more tax efficient. I am not qualified to provide financial advice but maybe someone like @dunstonh can give a better answer.

lonibra

It's a great question but the answer is almost entirely personal. In my case, I have far better places to put spare money in when compared to paying off a repayment mortgage at 1.5%.

I could put it in my business, in my pension or my S&S ISA. As it's a repayment mortgage, I can rest assured that it will be paid off at a known point in the future. If interest rates rise sufficiently, I can start considering whether to overpay.

As I get older, with the recent pension freedoms, putting excess cash in towards my pension gets more and more attractive.

But that's just my individual approach.

getmore4less

You now have the mortgage payment to replenish the savings.

Is lack of saving a a problem?
What were you saving for?

Sometimes asking the question slightly differently can help.

If you had a mortgage free house would you get a mortgage then what would you do with that money
(that assumes you have the monthly payments available)

csgohan4

It's probably too late to reverse the decision. However an ISA would be a reasonable option, only if you have done your own research and know what you want to invest in, or use an IFA

Some on here are using Interest only mortgages to fund their ISA/ Pensions as they can get a better yield than the interest they are losing to their lender

Personal preference

penners324

At that age group you should really be putting as into a pension fund as possible. So take the mortgage payments you're not paying into your pension fund.

dimbo61

You have choices now that you did not have when you had the millstone of a mortgage ( debt of death ) tied round your neck.
Take early retirement ! Change to a less stressful job !
Put all your mortgage payments into Pensions, ISA,s both cash and stocks and shares, gold, bitcoins, motorhome, holidays, drink and drugs !
Whatever you want 
Well done its nice owning the roof over your head and means you don't need to pay a mortgage or rent later in life

dunstonh

Barmymick said:

Hi all, due to interest rates on savings being poor, my wife and I decided to pay off our mortgage with the savings we had. Now we are left wondering if this was in fact the best thing to do at mid 50ish, as it will take a few years to replenish our savings to its former glory. What are your thoughts please?

This is an FAQ in the investment section.   In the majority of cases, it is not a good move where you are on low interest rates on the mortgage and its affordable.   Pensions and S&S ISAs are frequently the better option. Pensions sometimes massively so if you are a higher rate taxpayer.

However, its not all bad.  The money you will save on the mortgage payments can now head into a pension and go some way to replenish your wealth.

Thrugelmir

Barmymick said:

Hi all, due to interest rates on savings being poor, my wife and I decided to pay off our mortgage with the savings we had. Now we are left wondering if this was in fact the best thing to do at mid 50ish, as it will take a few years to replenish our savings to its former glory. What are your thoughts please?

You are mortgage free. A position many people would like to be in. If you still had hard cash savings and a mortgage you wouldn't financially be any better off. Look forward. Time to plan for retirement. Build your pension pots.