Pay Mortgage Off or Invest?

rothers

Is there any hope that savings rates will stay higher than interest rates in the next couple of years? Looking at the projected interest rate rises I’m even more tempted to pay my mortgage off. 

MX5huggy

Things have gone Bat !!!!!! crazy. Today you can’t guarantee anything. I think given your position with a tracker mortgage I would pay it off. 

SusieT

I have a low rate with a long term fix on my mortgage, but with all that is going on and if I were on a tracker and wanting to retire shortly I would be paying off the mortgage so that I would have the certainty of owning my home. You would have £10k left to put into savings and the endowment in a couple of years as an extra safety net. With the mortgage paid off your pension would give you a comfortable life. Until earlier this year I would have thought differently, but with interest rates forecast to be rising a fair bit more to me it seems a good option at the moment.

rothers

Thanks both, you have really confirmed what I thought. I can’t see savings rates getting above 6% by next year!

Sg28

I have a similar dilemma but different circumstances.

39 years old, Current mortgage £120,000 split into 40% 5year fix, 60% 10 year fix. 

5 year fix 2.29% expires in 11 months
10 year fix 2.5% expires in 7 years. 

Im lucky enough to have the money to clear the entire mortgage if I wish. 

For me the decision is a lot more clear cut. Offset the 10 year fix with a decent fixed rate saver once I can get at least 5%+ for 5 years. Then review the situation in 7 years.

Offset the 5 year fix probably chasing instant access/short term fixes up as rates rise and almost certainly clear that portion next year once the deal expires.

DannyCarey

I am fixed to 2025 at 1.8%. 

I am still overpaying every month, the same as I did in the good times, as I believe the era of cheap interest rates is definitely over.

Sg28

DannyCarey said:

I am fixed to 2025 at 1.8%. 

I am still overpaying every month, the same as I did in the good times, as I believe the era of cheap interest rates is definitely over.

Im canceling my overpayments, better to stick the money in savings now.

rothers

Sg28 said:

DannyCarey said:

I am fixed to 2025 at 1.8%. 

I am still overpaying every month, the same as I did in the good times, as I believe the era of cheap interest rates is definitely over.

Im canceling my overpayments, better to stick the money in savings now.

I may struggle to do that if the interest rate rises sharply as I can’t see savings rates being above the boe base rate for long. 

Millyonare

Offset mortgage.

rothers

Millyonare said:

Offset mortgage.

If I put more into the offset account than my mortgage balance would I earn interest on the surplus?