Paying off mortgage

Doubleshotdamo

My 1.54% mortgage deal is ending. I have two loans - one is interest only, the other is repayment.

Fixed rates are much higher, nearer 5% now.

I'm fortunate enough to have saved well during the 5 year fixed rate, and am in a position to pay off the two loans.

My question is, should I? Being mortgage free would be great, but my current monthly payments that I'd not be paying would make no difference to me. The increased payments would hurt, even if I continue with the 50/50 mortgage. I'm wondering if I should invest, find a savings account paying more than my new mortgage rate, which is likely 4.84%, or just get rid of it.

Woodstok2000

Whats the duration on your mortgage(s)? If you pay them off, does it wipe out your savings?

Doubleshotdamo

I'm 53, mortgage finishes when I'm 64.

No, not all my savings will be wiped out.

My savings are for retirement as I only have a small workplace pension.

BikingBud

Your workplace pension is a savings account likely the best savings deal you can get.

How do you pay into your workplace pension? Sal Sac? Does your employer match your contributions at all, to a limit?

Would the pension grow by more than you can save by paying the mortgage off?

How would reallocating your mortgage payment, even if quite small, to your pension enhance your pension?

If you saved the mortgage payment into a saving account would you pay tax on the interest?

Can you decant your savings directly into your pension or contribute more via sal sac and live off your savings, whilst still retaining an emergency fund?

Quite a few questions but the answer is never simple yes or no and other opportunities might lead to a better long term situation. So worth investigating and understanding wider options.

Doubleshotdamo

My workplace pension is an investment not a savings account.

Not salary sacrifice, employer pays 3%, I pay 5%

Don't know, no crystal ball.

Don't know

Yes, I'd pay tax, unless I used the remaining of my wife's tax allowance.

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/82153221#Comment_82153221

It's no wonder your workplace pension is small with a personal 5% contribution. I would suggest that your should be your focus rather than a savings account or paying off the mortgage.

It doesn't take a crystal ball to see that 20% tax relief on any pension contributions is quite attractive.

GrubbyGirl_2

Watch yesterdays GMB - Martin went through this and if I remember there are calculators online (maybe even on this site) that can help

StewedApple

It's tempting to see to frame this question as a binary "Should I pay off my mortgage or not?" when the real question is "What's strategy can I adopt which will maximise my financial position?"

It's fashionable to extol the advantages of living mortgage-free but as you're realising this may not be in your best interest. You may gain more from an approach which maximises your investment of the money you already have and maintain a mortgage which is both manageable and comparatively low in any event.

Increasing your pension contributions will certainly be tax advantageous, an investment ISA in some select funds, and a cash buffer for the unexpected may be a more rewarding strategy than "I paid off my mortgage".

Worth doing the legwork on the options.

born_again

but my current monthly payments that I'd not be paying would make no difference to me.

Why? As you would have that amount free to invest as you see fit?

El_Torro

Investing rather than paying off the mortgage early is a valid choice. However you haven't said how familiar you currently are with investing. It's not rocket science, but it's very different to saving.

I probably wouldn't go down the road of saving rather than paying off your mortgage. If your mortgage will be 4.84% going forward it's unlikely you will find savings accounts that pay significantly more than that.

From what you've said in this thread I would pay off both mortgages now. Then being mortgage free you can concentrate on increasing your pension and Stocks & Shares ISAs in the coming years before retirement.

StewedApple

https://forums.moneysavingexpert.com/discussion/comment/82153541#Comment_82153541

I like spam.