Should I pay off my mortgage

Nole13

Afternoon all!

To keep it short because you probably heard this many times before.

End of January next year my fixed term is finishing,at the moment is fixed at 1.49%.
I will have roughly £70K left on my mortgage.Should I pay it off in January or is it not a good idea?

I looked around and my new rates will be around 4.6-7 % or so.My saving account it’s less that 4.5% so I am thinking to pay the mortgage off and be done with it.

I am 47 so plenty of time so top up workplace pension etc etc till retirement.What would you do or did in similar situation?

Thanks in advance for any opinions!

Jemma01

I would pay it off, why pay interest when you have the cash to free the debt and walk into your home knowing it's fully yours. It's not like you'll be making profit out of them. Even if the interest is 5 or 6, that's taxable. So it's not like for like.

Paying your mortgage is putting the money into an asset, so unless you need access to cash in the short term, I would pay it off and enjoy not having mortgage to pay every month. Best feeling seeing your monthly bills without mortgage entry

Nole13

Hello

That was exactly what I was thinking of doing to be honest but thought I might seek some advice before I do that.Some people are saying ,stick it in stock and shares etc.Some keep going on about credit rating etc etc.

Don’t need any cash at the moment so come January I hope to pay it off if nothing changes and have some freedom.

Brie

It depends on what you are giving up to pay the mortgage off. Savings? Fine. What interest rate you are getting on savings will determine if you pay it off in January or earlier.

Your credit rating isn't a thing. Your credit reports are. Do you need credit? More than you have now? Are you planning on buying something really expensive or applying for several new credit cards/loans? If not then don't worry about it.

I took a leap of faith when I was able to cash in shares at a good profit and paid off our mortgage. It feels great.

Nole13

Money to pay it off will come from savings.

No plans of buying anything expensive in near future to be honest.Was thinking of changing cars but just out of boredom rather then needing new ones.So at the moment dont need loans,credits etc etc.

I am more or less sure I will pay it off but just out of curiosity thought I’ll ask and see what others did in similar situation.

Thanks

born_again

https://forums.moneysavingexpert.com/discussion/comment/82098375#Comment_82098375

Don't forget that with no mortgage to pay, the OP can save far faster.

Especially given new mortgage interest rate is going to be higher than savings interest rate.

surreysaver

It's a personal thing. Some people like the security of it paid off, others use the fact its likely to be the cheapest loan they'll ever have to fund other things.

I'm nearly at the end of my offset mortgage, which has tracked the BoE base rate since 2004. Best decision I ever made, as I've been able to take money out willy-nilly, but since interest rates went up after COVID I've balanced the mortgage with savings, so effectively paying no interest on it.

Perhaps you could try and get a mortgage with a low rate?

jackieblack

I agree it's a personal thing, but the peace of mind was worth every penny for me.

Savings can be built up again - I'm planning on retiring in 2 years (7 years before SPA) by living on half my take home pay since having no mortgage to pay and saving the rest, this will bridge the gap until I get my SP

Zerforax

How much will your monthly repayment be at that point? Maybe like £400?

With the mortgage being more manageable, some decide that they prefer to have more liquidity (whether cash savings or invested in stocks and shares ISA).