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
    First Anniversary Mortgage-free Glee! Name Dropper First Post
    Forumite
    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 (aiming for October 2025)
    • MFW 2024 #15 £446.24/ £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 £4.44
  • 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
    First Anniversary Mortgage-free Glee! Name Dropper First Post
    Forumite
    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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