Is it best to be mortgage free?

deelight_2

Hi all, Im looking for a little advice here.
I have 7 years left on my mortgage and owe £19,000, I have saving that would clear it (with a little belt tightening first) but is it a wise move? Someone told me it was better to have a mortgage... I don't know why but I wanted to check this out. I am 34 and will be looking to upgrade home in a couple of years time. Thanks in advance.

Andy1977

I am in a similar situation to you (have just posted a similar thread as well!). The way I see it is that in the current climate (and arguably at any time) you would be wise to retain 6 months income in savings and in doing so make use of your isa allowance. I thought the general rule is pay off your mortgage UNLESS you can get a better rate on your savings (probably only likely via a tax free isa). However, in your situation it sounds like you would be wiping out your savings in order to clear your mortage which in the current climate would make me a little nervous. It ultimately depends on your mortage rate and the rate your savings are earning and your own situation but I would certainly retain some savings for any 'unforeseen circumstances' that could arise.

I don't know of any particular advantage in having a mortgage although I'm no expert!

Incisor

Andy1977 wrote: »

... I don't know of any particular advantage in having a mortgage although I'm no expert!

The advantage is that you fix the price of owning something in the housing market today and hopefully the mortgage with the interest is less expensive over N years than buying the same house in N years time. Obviously, that does not apply at the moment.

noh

I was in a similar position a few years back. My solution was to remortgage with an offset mortgage from First Direct and 100% offset the mortgage. That way I am no longer having to make any payments but the money is available should I need it.
At that time there were no fees involved but now there would be a cost.

Nigel