Redundancy - Pay off remaining mortgage or am I missing something? All help appreciated

Pambarhop

Hi All,

I was recently made redundant, I'm 51, my mortgage balance remaining is £64k. I have two pensions with reasonable pots, one pension is a final salary and at 60 will give me approx 20-24k a year, the other pension (With the company I just left) has a pot of approx 180k and is available at 55. I currently have 70k in savings (This is in addition to the 64k I would use to pay off the mortgage). I am very fortunate, even though I am now out of work, but my current plan is to go back into education and with luck be a qualified Nurse at 55-56, all being well I will work with the NHS until I'm 64-65, then I'll hang my work boots up! So that's the context, my instinct tells me that I should I pay off the mortgage, it seems crazy to pay £600 per month, whilst £300 of that is an interest payment, this would reduce my outgoings too. 

Whilst it seems to make sense I've been out of touch with all things financial, are there any gotchas I'm missing, the only other thing I could think off is it better to invest the 64k elsewhere? 

All thoughts appreciated...

Kind regards
S

willowparrett

If you're comfortable with what you'd have in terms of pension and 'emergency' savings (the £70k), and don't have any notable financial wants coming up (e.g. helping family get on the property ladder, or through university), then I'd be tempted to pay it off

At the moment it's just worth doing a bit of maths on the interest you're paying on your mortgage, whether there would be an early repayment charge to pay off your mortgage, and what interest you'd get if you put the savings in a savings account (currently >4%) instead. 

There are lots of calculators online that can tell you exact figures, but as a general guide, if you're in a fixed rate mortgage below 4% which will usually have an early repayment charge, I'd be tempted to stick to your normal repayments, and put the £64k in a savings account (with a level of access that you're comfortable with) until your fixed rate mortgage ends - and pay it all off then.  

Pambarhop

Hi,

Many thanks for your thoughts, I should maybe have mentioned, the mortgage I have is a lifetime tracker (1.89%) above BR, there is no early redemption either which makes it appealing. As you say its doing some maths, my gut feel is that I'm paying more interest on the mortgage as it is than I would get in savings...maybe. Time to get the spreadsheet out...

Kind regards