Paying mortgage off?

nicks

I have been given £30,000. Is it worth paying off our £20,000 mortgage & investing the rest? I am seeing an IFA, but wondered if anyone on here had any ideas before we see him?

Thanks

Nicks

posh*spice

http://www.moneysavingexpert.com/mortgages/mortgages-vs-savings

This is Martin's view on POYM.

Basically,

1) Do you already have any savings?
2) Do you have a cash ISA?
3) What's your mortgage rate?
4) How much will your mortgage co allow you to POYM? Are ther penalties?

I, personally, would love to be mortgage free;)

amcluesent

I would say pay it off, it's the only way to be 100% certain way of making money work for you, since you eliminate compound interest over the remaining life of the mortgage and there's no safe saving scheme with the same return.

The downside is you're locking money into what is an illiquid asset.

Right now, IMHO, isn't a good time to invest a £10K lump-sum, we may be in the middle of sucker's rally and could see another big drop in all investments. I'd put £3K6 in a cas ISA, and the rest in a high yield bond.

Then allocate what you would have spent on the mortgage to periodic purchases into some investment trusts.

nicks

Thanks for the replies. I have looked at the link provided & will certainly look into paying the mortgage off.

Thanks again

Nicks

chesky369

a) credit card/shop card debts
b) mortgage (but check you aren't penalised before you do so)
then
c) in the meantime, put in a high-ish rate savings account
d) open ISA (2 if you have a partner)

nicks

We also have about an £8000 personal loan. I presume that should be paid off 1st?

Nicks

bigbloke45

If you pay off your mortgage, it's the same as putting your money into a savings account paying the same interest but no tax. It seems to me to be a good thing. Just check that you borrow again against your home if you need to.

Also, it's a wonderful feeling to be beholden to no-one!

StevieJ

May be worth keeping a balance of say £500 to assist your credit file, also your mortgage provider may allow you to borrow the funds back if you need them in the future.

chesky369

an £8000 personal loan. I presume that should be paid off 1st

YES

pjala

Except that you may be penalised for paying off the loan early - it may be cheaper to keep paying the regular loan amount.
I would imagine that people here would be able to help you more if you gave out specific sums and interest specifics on the loan amount, plus interest rate on the mortgage amount etc.
If you are not happy to do that, I would say - it all comes down to visiting an honest and independent IFA ( I realise I have said independent twice), who will go through the figures and hopefully calculate the most profitable way forward.