Always a good idea to pay off your mortgage?

magicdogsbrain

This is a very large forum so I am not sure if this point has been raised before.
I want to try and explain why, in certain circumstances, I think it’s better to not pay off your mortgage.
The part of the forum I have read so far seem to like the idea of paying off your mortgage – so if I offend anyone then I apologise in advance – here goes...
My circumstances are as follows: -
1) I am late 30s and have young family ( 2, 5 and 14)
2) I have a good (BOE +0.44 for term - 2035) offset CAM
3) I live in my first house and want to trade up in 5 or 6 years before my younger 2 go to secondary school.
4) There is a credit crunch and my mortgage provider is offering the same mortgage now for BOE + 1.69!
5) My current house is worth about 200k and I want to upgrade to about 300k.
6) My current Mortgage is 150k but I have about 30k offset and 20k stooze (I’m not greedy J)
I have 2 options: -
1) Pay off as much as possible of my current mortgage and remortgage in 6 years and use equity for new house.
2) Offset as much as possible and use the offset and equity to purchase new house (the current mortgage is portable).
If I go for option 1, I cannot guarantee that I can get a good mortgage deal – I don’t like the idea of BOE + 1.69!
If I go for option 2, I get to keep my current deal for 21 years after I move and can always remortgage if better deals start to come through (yeah right!)

guidance/suggestions/brickbats will be greatly appreciated.

magicdogsbrain

P.S oops sorry about having no spaces.
P.P.S why is the time of the posts sometimes wrong on this forum?

silvercar

If your mortgage is portable you may as well put all your savings in the offset and not pay down the mortgage. Same net effect, but you retain the use of the money.

dimbo61

as you are paying 5.44% on your mortgage you may well be better off filling
your ISA allowance for yourself and the OH first.
Is your other half working at the moment ? none tax payer !!

magicdogsbrain

Using my ISA is something I have given a lot of thought to. My OH does work but does not use ISA allowance. I use about 4K of mine with stocks and shares ISA, so I could pay 3200 into cash – and use my OH cash allowance.

The trouble is, even the best cash ISA’s don’t beat BOE + 0.44 long term. Yes I could keep moving them around all the time to get a few fractions of a % - but is it worth it?

Also, I agree that if I was to spend lots of my time completely debt free – my ISA allowance for a given year would last for a longer time than my offset. But, I will need it anyway in 5 or 6 years time when I reportage – so unfortunately – I cant see more than a very very marginal advantage in ISAs from my perspective. I realise this is different for other people.