Should I pay my mortgage off?

Chocolatebiccies

Hello,

My mortgage Is coming up for renewal in November and it currently stands at £32,000. I have been on a fixed rate for five years at 1.8% and I’m terrified about the monthly payments jumping up when I renew.

Having done a budget plan this week in preparation to meet my mortgage advisor, I was shocked to find my incomings almost match my outgoings to the penny (and doesn’t include me having an emergency saving pot) which terrifies me and is causing me to lose sleep.

I have been incredibly fortunate enough to have been left £35,000 in a will last year, which my parents have been holding for me… should I use it to pay off my mortgage?

 I am a single mum on a part-time wage. I am unable to work full-time due to health reasons so my current salary is likely to stay as it is with no scope for increase. And it is currently £19,000 a year.

my worry is that if I pay it off in its entirety I will only have a little bit of a buffer left for emergencies.

la531983

Chocolatebiccies said:

my worry is that if I pay it off in its entirety I will only have a little bit of a buffer left for emergencies.

But you can then use the money you were paying towards the mortgage to build the "buffer" back up.

pramsay13

I would absolutely use the will money to pay off the mortgage as the interest will jump to around 4%. 
You will have a few thousand left over and then you can add to that every month with your mortgage money. 

stuhse

If you pay your mortgage off you will then be able to commence saving whatever its is your current payments are every month..you will soon have a buffer if you have the self discipline.

Chocolatebiccies

la531983 said:

Chocolatebiccies said:

my worry is that if I pay it off in its entirety I will only have a little bit of a buffer left for emergencies.

But you can then use the money you were paying towards the mortgage to build the "buffer" back up.

I haven’t thought of that, I would be saving about £275 a month in that case

vacheron

There are a number of valid reasons not to pay off a mortgage, but based on your post that concerns about finding money causes you serious stress and concern, so I feel paying it off would be the best option in your case.

You will also save all the advisor / arrangement / valuation fees for your re-mortgage. 👍

And as the others have said above, it will free up some money each month to fill your emergency pot back up. 

Also if your money kept by your parents was stored in your best interests, (say in a savings account paying 4%), you should have earned an extra £1,000+ in interest on top over the last year. 🤞

Chocolatebiccies

vacheron said:

There are a number of valid reasons not to pay off a mortgage, but based on your post that concerns about finding money causes you serious stress and concern, so I feel paying it off would be the best option in your case.

You will also save all the advisor / arrangement / valuation fees for your re-mortgage. 👍

And as the others have said above, it will free up some money each month to fill your emergency pot back up. 

Also if your money kept by your parents was stored in your best interests, (say in a savings account paying 4%), you should have earned an extra £1,000+ in interest on top over the last year. 🤞

Thank you 🙂

saajan_12

Don't do anything just yet - keep it in a high interest savings account until Nov. The 1.18% rate you're on is very good and would be beaten by the interest on your savings, plus there's no point in incurring Early Repayment Charges for the sake of a few months. 

Prepare to pay the mortgage off fully as soon as the fixed term finishes. It should be slightly lower than the 32k and the 35k in savings will have grown a little, so by Nov you should have over 3k left over after paying off the mortgage in full. That's a pretty decent emergency fund!