finally can see some light

Tankerman24

Hi everyone, Just thought Id post and see what people think.

Last year I sold my house and bought a lovely bungalow and reduced my mortgage by around 100k. I previously fixed for 10 years at 2.79% which runs out in Sept. at the moment the mortgage has 11 yrs and 11 months to go and the repayments are £304 a month ( down from £790 ) When I re negotiate my mortgage in sept Im thinking of paying 5K off leaving £34k and then maybe fixing for 5 years and bringing the mortgage term to 5 yrs which would make the monthly payments roughly between £500 and £600 a month if Ive calculated right and then i would be mortgage free.

Are we better being mortgage free or just enjoying the low payments for the next decade?

Between me and my partner we have no other real debts just general bungalow and car running ( car is paid for) and we have savings 25k and have a roughly joint income of £49k before tax

any thought or anything I may have missed please.

Im 58 and would like to have some years working knowing we are mortgage free :)

edinburgher

How are your pensions?

Tankerman24

I have around 190k in pensions at mo after taking my 25% tax free sum a while back , paying 5% into my work scheme and employer pays 7%

Jemma01

How old are you? That would probably help you determine your priorities?

I'm 40, personally, I hate debt, and hate having to pay interest on the debt that I could use to go on holiday and enjoy life with. So I would reduce the term if it was me. So far I think I paid less than 6k (interest) on my mortgage that I could have gone on 3 holidays abroads with.

I have plenty of time to fill up my pension and savings. Owning my house outright is a safety net.

Tankerman24

Hi Jemma , Im 58 my partner is 52 ( mortgage is just in my name) so if I did what I stated I still would have some work in me while being mortgage free. Guess Im wondering if im better paying it off in 5 yrs or having 10 yrs of low payments. I kind of feel in the volatile world it'd be better paid of but dont know. Thats why I came here to here some different fresh points of view :) maybe be told some things I'd not even thought of.

South_coast

https://forums.moneysavingexpert.com/discussion/comment/81865280#Comment_81865280

Savings maybe, but the earlier you start with a pension, the better. Small amounts added over a long period of time will massively trump large amounts later on.

OP, your plan sounds sensible to me. Do you have the capacity to be even more bold and maybe reduce the term to 2 or 3 years?

gwynlas

Rather than paying off your mortgage early you might have more to gain by paying this sum into an additional pension.

Your mortgage could be fixed for 5 or 10 yrs and would be paid off by the time you rech SSP

Tankerman24

https://forums.moneysavingexpert.com/discussion/comment/81865317#Comment_81865317

I think pushing it to 3 yrs would be possible at a push but I worry if anything went wrong in those three years, guess i could re arrange it if I struggled

Tankerman24

Thankyou, thats why I came here to see peoples different views. wonder if a visit to a financial adviser before the mortgage needs renegotiating i would be an idea.

CrazyBee787

I personally prefer to pay off the mortgage early because I am not good at saving and when I see a big pot of money I think what could I do with it. If my mortgage was paid off I would have more disposable income also. However if you are more savvy then potentially it would be better to put the money into high interest account or ISA to start or something and / or I am hoping to one day get the full 50K in premium bonds, it doesn't make interest but you have a chance of winning big, it is almost gambling but you more likley to win something then nothing with a full 50K collection. Just a thought.

Brie

What's to stop you paying a huge chunk with your savings and then overpaying as much as possible to get rid of the rest. Being without a mortgage would mean you could build up your savings again quite quickly and perhaps put more into both of your pension pots at the same time.

Being mortgage free is delightful!