Pay off or save

natman

Hi, this is my first thread, good to see so many people out there wanting to be debt free - i have a quandry!!!

I am 31 my partner is 29. we took out a mortgage in 1999 for 25 years. Around 2 years ago we changed our term time to pay back and now have around 7 years to pay back the outstanding balance.

The oustanding balance is about £28,000. Between us we have managed to save up some money and have £25,000..............

The quandry -

Do we pay off £25,000 leaving £3000 and pay that off in a year or so?? from a financial pont of view this seems 'the sensible' thing to do but I just wondered if any other young couples have been in ths position and what decisions they have made.

I suppose I worry that if we are mortgage free, would i then think about giving up work, travelling the world etc etc??? I am really interested what other people have done when and if they decided to pay their mortgage off early and what advice you may have.

Cheers!!

doodle_bug

I have a very similar conundrum to deal with and will probably not pay off my mortgage. It is possible to get at least 6.5% (Barclays cash ISA) interest on savings tax free. If you have a lower interest rate on your mortgage or can get a lower rate by switching then you are in effect borrowing on your home to save at a higher rate, I can't see any reason why not to do that but watch this space. If you haven't put any money in ISA's this year then you could between you and your partner put in £6,000 before April 7 and then put in £7,200 after April 7. With the Nationwide (6.15%) you can transfer any amount from any other ISA's you have, some of the other deals you can only transfer £3,000.

Jonbvn

Early Retirement

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doodle_bug wrote: »

I have a very similar conundrum to deal with and will probably not pay off my mortgage. It is possible to get at least 6.5% (Barclays cash ISA) interest on savings tax free. If you have a lower interest rate on your mortgage or can get a lower rate by switching then you are in effect borrowing on your home to save at a higher rate, I can't see any reason why not to do that but watch this space. If you haven't put any money in ISA's this year then you could between you and your partner put in £6,000 before April 7 and then put in £7,200 after April 7. With the Nationwide (6.15%) you can transfer any amount from any other ISA's you have, some of the other deals you can only transfer £3,000.

Just to clarify the above.

Each person can put a max of £3k into a mini cash ISA & £4k into a mini S&S ISA. Alternatively, they can put the whole £7k into a maxi S&S ISA.

From April, these allowances change to £3.6k & £7.2k respectively - per person.