Should I Pay Off My Mortgage?

TerryM

Hello all, long time lurker, first time poster - I'm looking for some advice:

My wife died three months ago.

I have received £38,000 from a Mortgage Protection policy. I also recently received £10,000 for a mis-sold endowment policy. This brings my total savings to £67,000, all of it at the moment with Nationwide - £58,000 in eSavings and £9,000 in a Members ISA Bond.

I currently have a Nationwide repayment mortgage with a balance of £59,000 which will be paid off in 2015 if I keep up the monthly payments.

What's the best thing to do - pay off the mortgage and save/invest the £650 monthly payments or keep up the payments and invest all or part of the £67,000?

I'm 54, with 2 kids at University and in employment. My company, a very big US multinational, has a final salary pension scheme but I've only been with the company for seven years and I'm not confident I'll be with them until I retire.

I'm a complete investments virgin, my wife and I never had much spare cash until recently, so any advice would be very welcome.

Thanks in advance
TerryM

zzzLazyDaisy

In a similar situation, I paid off my mortgage and diverted the monthy payments to a regular savings account (after using up my ISA allowance, of course!). There are some great deals around at the moment.

It was the best thing I ever did, and has allowed me to do things with my life that I couldn't have done if I'd still had the mortgage round my neck.

BUT.... if you can afford it, why not keep a bit back and treat yourself to a really super holiday / new car / something you'd like but would consider an extravagance in normal circumstances? Okay, not particularly 'moneysaving' I know.... but it sounds like you've had a hard time and maybe a bit of fun wouldn't go amiss?

zodiac

First of all, sorry about your loss.
I would say the same as lazydaisy, pay it off and save the money that was going out, even with kids at uni and a house you are important and it could go (partly) towards a retirement package.

or pay off £49 thou and treat yourself (maybe the children?), in fact all of you could probley do with a nice hoilday

TerryM

Thank you for your replies, much appreciated.

If anyone else would like to add anything I'm still listening - thanks!

sboard

Again, sorry for your loss. The replies you've had make sense - pay off the mortgage so you have no debt but wait for the appropriate time to pay it off so you don't pay a cancellation fee - eg. at the end of a 3yr fixed rate, that kind of thing - until then consider overpayments. As for savings, ISA's are fantastic, e-accounts & bonus are great because you have higher interest, although taxed but both are accessible, although there's normally a loss of interest for that month for withdrawls. I'd also keep money handy to pay bills off, etc. These new high interest current a/c's are good but they expect a high sum to be paid in each month. I keep the cash for large bills in an interest a/c with no penalty to transfer to the current a/c. Ok, it's 3.25% interest (£500 min) but you can move the money around without penalty and still get a fair rate. For long term investments - Bonds are still the best but remember the money is fire and forget but not bad as a 10 year investment if you're thinking of retiring at 65 and great returns. Lastly, consider off-shore a/c's for large sums or if you're handy with DIY then property and rent - Sorry, I'll stop rabbitting now. Hope that helps.

Joe_Bloggs

Sorry for your loss. Paying early repayment charges is a waste of money if you got a good deal on the mortgage. Don't rush and make any rash decisions. You can over pay Nationwide by £500 a month and you can get another deal cheaply if you are on their BMR (short for bummer) rate AKA Standard Variable Rate. You can claw the overpayments back but benefit from reduced interest payments and higher capital repayments in the meantime.

You may want to keep some of that money in reserve to help the kids get on the property ladder once the market stabilises or falls and their career plans fall into place.

Pensions are where where my limited understanding of the financial world falls down. You may have the option to pay into your pension to make up years. Your sadly departed spouse could have received a pension income and one off payment in the event of your death. Dependent offspring may still be in such a position but it might be worth checking where you stand and what you can do about it.

J_B. (I am just a financial consumer.)

TerryM

Once again, thank you for taking the time to respond. Lots of great advice and plenty to thin k about.

... and thanks for the condolences, we were together for 33 years and it's impossible to put into words how much I miss her.