Do I keep my mortgage or use savings to pay it off

TimmytheRobot

Hi, newbie here with a question. Over the last 20+ years we have been saving and 7 years ago put the money into a stocks and shares ISA which has given us a return of approx 7% spread (ups and downs) over the last 7 years. We are currently on a cheap fixed rate mortgage with roughly £85k left to pay when our deal ends early next year. So my question is should we use our ISA savings to pay this off (and save the interest) or continue with our investments and suck up the mortgage price hike (£250 extra per month)? Current mortgage quotes are coming in around 6.2%. Is it as simple as 7% return on investments beats 6.2% interest on mortgage?

South_coast

How much would you be left with if you used the savings to pay off the mortgage? Would it wipe you out, or leave you with a buffer for emergencies? How much money would not paying the mortgage each month free up?

TimmytheRobot

South_coast said:

How much would you be left with if you used the savings to pay off the mortgage? Would it wipe you out, or leave you with a buffer for emergencies? How much money would not paying the mortgage each month free up?

Ho South Coast. Yes, its a wipe out all but about £5k of savings but the monthly 'cash in hand' is circa £800

South_coast

Well £5k is still a decent sum. That and a credit card should see you weather most financial storms which could come your way, and with £800/month to play with, you could easily right yourself again if you needed to dip into it. I guess in that case it's more of an emotional decision, as there's not a huge amount in it numbers-wise. What was your plan for the S&S money when you started putting it away? Was it always meant for the mortgage, or for retirement, or just "it would be nice to have some money saved"? I think if you can revisit your original motivation, then that might point you one way or the other. And if you're not sure, you could always pay some to the mortgage and hold on to some - it doesn't need to be an £85k-or-nothing decision