Repay mortgage now or wait until sell

winterhope

Following a bereavement I’m now in the position to pay off my mortgage. I would like to do it now but wish to put the house on the market in a month or two. Should I payoff now or wait until it sells? To add I may have to rent a place next.

Bigphil1474

It basically depends on the interest rate. If you are still on a good mortgage deal and can better return putting the money elsewhere, e.g. in savings, then there is no sense paying off the mortgage. If the mortgage rate is higher than what you can get for the money elsewhere, then it makes sense to pay off the mortgage. It also depends how much it is. A low mortgage balance might mean the difference is pennies whichever way you go. If it's a big mortgage, the difference will be more. If you are gonna rent next, then the mortgage would just get paid off when you sell. I don't think there's any benefit as a seller between being mortgage free and not being, so long as you have some equity in the property.

saajan_12

Sorry for your loss @winterhope.

Following a bereavement I’m now in the position to pay off my mortgage. I would like to do it now but wish to put the house on the market in a month or two. Should I payoff now or wait until it sells? To add I may have to rent a place next.

Are you still in the minimum term of your mortgage (often 2/3/5 years)? If yes, then there might be early repayment charges to repaying early. If not, then I'd just pay it off. As long as you keep enough emergency savings aside, there's no real need to align a mortgage redemption and sale. It could take months for viewings, offers and conveyancing before your house actually sells, all the while you could be saving the mortgage interest.

badmemory

I would be wondering about paying the mortgage off & whether there was enough left to pay the rental deposit BEFORE the house sale went through. This would save all the hurry hurry & move hassle after the actual sale.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81869872#Comment_81869872

all the while you could be saving the mortgage interest.

Whilst at the same time losing the interest on saving the money.

As already mentioned it depends on the mortgage rate they have and current savings rates and how they compare.

If the mortgage rate is 2% and the savings rate is 4% and the amount is £100K for 6 months . The difference is a £1000.

saajan_12

https://forums.moneysavingexpert.com/discussion/comment/81870260#Comment_81870260

I said IF out of the minimum term which is usually when you might have a lower rate. If out of that time, then OP would likely be on a SVR rate which usually close to if not higher than savings rates. Not to mention potential tax on the interest earned. Not to mention optimising rates might not be the priority when feeling overwhelmed already.

Please read in full before correcting.

user1977

Also bear in mind you might create a complication if the registration of the mortgage discharge hasn't been completed by the time you have a sale transaction on the go. It can be easier for the selling solicitor to deal with redemption/discharge as at least they're then in charge of the whole thing.