Is paying off my mortgage the right thing to do?

russppt

I never thought I'd be writing this email.
In January 2025 our 25 year mortgage term comes to an end and we will have to settle our morgage.  We are in the fortunate position to be able to do this, however we held off as the last deal I entered us into was at 0.9% and we are earning >5% interest on the funds  (good luck more than judgement).  

The reason I ask about whether it's a good idea to settle is that we are both self employed.  A family member, also self employed, paid off his mortgage and had terrible problems buying another house and getting a new mortgage when he divorced his then wife and purchased a house with a new partner.

The value of the house is now 3 times more than when we purchased back in 2001 so we already have significant equity.

By paying off our mortgage are we cutting off a line a credit we may need at some point in the future or would it benefit to keep a small mortgage ticking over eg 10k etc?

Thanks in advance for any insights.

Brie

No.  Pay it off.  

The fact that someone else had problems getting a mortgage has more to do with other things in his life.  Like that he was single (assuming he hadn't (yet) married his partner) makes him look a higher risk.  Possibly there were other debts that he hasn't mentioned to you.  He was renting perhaps and had a long tenancy that he needed to break, etc, etc, etc.

If you and your OH aren't intending a split the same situation won't apply.  If you decide to get a bigger place well  likely you'd have to apply for another mortgage to afford it.  And if you don't pay off your mortgage by 2025 you'll need to remortgage in any case.

Not having a mortgage is a big weight off anyone's shoulders.  And would mean you could be dropping big chunks of money into pensions, ISAs etc and if you needed to buy something else the banks would like the look of your finances.  

Archerychick

The only reason I wouldn’t pay it off would be dependent on savings rates vs mortgage rates when you get to next year. I expect financially it will be better to clear it. I’m in a similar situation but I’ve got a further 9 months than you.

nice position to be in, well done