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Should I be pay off my mortgage?

Hi, 

I'm in a fortunate position (at the moment) to be debt free apart from my mortgage which is due for a renewal in 4 weeks. 

The mortgage was on a fixed term interest at 1.5% but will go up to 5.11 % on a two year term mortgage. 

I am in a position to pay off the mortgage which is at around 90k but was wondering should I pay it off or would I be better to invest it?
There's so much uncertainty with interest rates on saving/mortgages it's a mine field. I know none of us have a crystal ball but just wondering if anyone could advise. If invest it would have to be something risk free so not investing in shares. 

I have a safety net of 6 months in place should I lose my job so should be OK if the unfortunate happens. 

Any advice would be greatly received. 

Comments

  • L9XSS
    L9XSS Posts: 438 Forumite
    Third Anniversary 100 Posts Mortgage-free Glee! Name Dropper
    Maybe some things to consider, how old are you and when do you plan to retire? What is your pension provision like, will it provide a comfortable lifestyle? Can you do both. (Pay off a decent lump sum off the mortgage and invest the rest). I don’t think there is any right answer, it all comes down to acceptance or tolerance of risk, paying down a debt.
  • As L9XSS has said there really is no right or wrong answer here it really depends on your position in life and your personal preferences.

    Personally, I would probably pay off my house just to know that I don't owe anyone anything. That might not be the smartest thing financially speaking but would be great from a psychological perspective. 

    You are in a great position whatever you decide to do! Good luck with your decision


    • Original mortgage end date: March 2041
    • Current mortgage end date: Dec 2032 
    • MFW 2025 #15 £628.00/ £2,400 /// MFW 2024 #15 £1,608.85/ £2500 /// MFW 2023 #15 £8,617.84/ £10,000 /// 2022 #15 £7,315.24/ £7250 /// MFW 2021 #15 £8,530.07/ £8500
    • Daily interest is currently £4.48
  • Age wise I'm going to be 50 this year, have no pension (been contracting) - hope to retire when I'm 60 (or before). Knowing my luck will probably be later :smiley:

    I'm very much risk averse but would probably fix for a couple of years for a good return. 
  • L9XSS
    L9XSS Posts: 438 Forumite
    Third Anniversary 100 Posts Mortgage-free Glee! Name Dropper
    My view therefore based on the above would be to make your savings work harder. Whether you drip feed this into a SIPP to gain the 20% tax relief, or higher, I would assume it’s the lower as your a contractor and paying your self a nominal salary and dividends?
    You could then access 25% tax free lump sum, to help you pay off the remaining mortgage balance (I did something similar, massively built up my SIPP in 5 years whilst overpaying my Mortgage, then used some of the TFLS to pay off the mortgage). I’m now paying decent sums into my SIPP every month whilst contributing to a work pension as well. I was “lucky” that I saw very decent growth on an initial 65k in a SIPP). With the markets, investments and mortgages in turmoil in your position I would pay off the mortgage at 50 (knowing the asset was relatively secure) then invest in a private pension for the next 10 years.
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