Do higher interest rates change your thinking on investing vs paying down mortgage debt

kaMelo

Bigwheels1111 said:

My dad said pay my mortgage off asap.
Took it out in December 2000, First payment January 2001.
Last payment April 2012.
Then rented for 9 year and sold for four times what I paid for it.
The whole house price and mortgage payments were covered by rent.
I now have the cash in 5 and 7 year fixed rates, giving me a nice income, Better than working that’s for sure.

Where did you live for nine years?

Bigwheels1111

kaMelo said:

Bigwheels1111 said:

My dad said pay my mortgage off asap.
Took it out in December 2000, First payment January 2001.
Last payment April 2012.
Then rented for 9 year and sold for four times what I paid for it.
The whole house price and mortgage payments were covered by rent.
I now have the cash in 5 and 7 year fixed rates, giving me a nice income, Better than working that’s for sure.

Where did you live for nine years?

With the wife, keeping separate properties worked well for us.
We have enough money from interest to keep us going until pension.
While keeping the capital untouched.
Then our pensions are more than we need to live very comfortably.

kaMelo

Simple explanation to a nosey question.

Khaderbhai

In the get rid of mortgage as quick as possible camp, but always have been. Was always advised by others to invest any spare cash in stocks and shares but for those that have regularly overpaid and/or cleared mortgage in full, they are reaping the rewards of that now (when interest rates and the markets are volatile).

boingy

waveneygnome said:

Zopa_Trooper said:

When you don't owe anybody any money nobody has any power over you.

Hmmm......have you met my wife?

You really are inviting smutty innuendo comments with that question. It's a good job we're all sensible adults... 

But to the bigger question, it doesn't have to be one or other. It's OK to throw some of your savings into the mortgage and keep some back for rainy days. Just keep one eye on your fixed rate ending and don't be too quick to jump into another fixed rate just yet. rates are on the up but then will probably come down. In the 90's we had a fixed rate of 11.9% when the variable rate was heading down towards 10%. On the upside we had a known monthly outgoing at a time when that really, really mattered to us and we were able to stay calm on Black Wednesday when a couple of my colleagues were in tears at the prospect of 15% rates. (Yes, kids. Double digit mortgage rates were a thing back then).

TheBanker

I guess I'm lucky that I've only ever known sub 2% mortgage rates. I've never been obsessive about paying the mortgage off - I've been more focused on pension contributions to get the tax relief. My mortgage will be paid off by the time I'm 57 which is the earliest I am likely to consider retiring. 

But the thought of higher rates in 2025, when my current fix ends, does concern me. Over the last year or so I've built up some cash savings, which I've just put in fixed term accounts. The cash will be available when my mortgage fix ends, and my current plan is that I will make a lump sum repayment. But I'm not sure at this stage - it will depend on rates and circumstances at the time. I think keeping the money in cash in the short term is a wise move though, because it gives me more options.

DietIrnBru

While there is a emotional wellbeing that comes with being mortgage free - I do look on in envy at folk in the same age group who have achieved it - I am also acutely aware of the danger of putting all the eggs in one basket. I would never stop my pension contributions especially with my NHS employer uplift and tax relief - my regular savings to cover antiticpated expenses and treats through the year - my regular ahare investments too as it's a source of regret I didnt continue those regularly since my 20s, as I would have had a pretty nest egg by now, ditto with the pension.

My mortgage LVT ratio will be below 60% come renewal in 2025 given the overpayments I have achieved. But I'm not going to accelerate even more cash in to save what would be tens of pounds per month and a store of wealth I wouldnt be able to access for years anyway.

VNX

My pension is “ok” not great not bad.

I will be 39 at remortgage next December, loan will be 40k ish, will see what’s what nearer the time whether to take out a remortgage or whether to clear it and be done with it.

im easy either way as I say I am not hell bent on clearing it but if rates are still stubbornly high I may clear it and then the money I’m used to paying p/m can then go into pension.

Decisions for another day but as Reading the comments above we are all in unique situations with regards mortgages, savings amounts, risk appetite and goals for the future etc  

deciding on how to navigate these turbulent times will be a very individual decision, no right or wrongs.

chockydavid1983

VNX said:

My pension is “ok” not great not bad.

I will be 39 at remortgage next December, loan will be 40k ish, will see what’s what nearer the time whether to take out a remortgage or whether to clear it and be done with it.

im easy either way as I say I am not hell bent on clearing it but if rates are still stubbornly high I may clear it and then the money I’m used to paying p/m can then go into pension.

Decisions for another day but as Reading the comments above we are all in unique situations with regards mortgages, savings amounts, risk appetite and goals for the future etc  

deciding on how to navigate these turbulent times will be a very individual decision, no right or wrongs.

Similar to me - I'll be close to 40 at remortgage next September. Yeah, having some cash on hand to make a lump sum payment at that time would be wise and can then make a decision whether to do that when the time comes.

jaypers

Latest Martin Lewis Podcast is well worth a listen.