Interest only mortgage - do I pay it off

Bitlost11 · 14 February 2018 at 12:44AM

Hello, very wise people. Wondering if any of you have a view on something for me!

I have an interest only mortgage, of 55,000 (50% paid) and savings of 76,000 however I have no regular income, hopefully that will change over time, but currently not in good health.

I have no dependants, and no one who will expect much when I die (hopefully 40 years away but as my bank have just called me it made me think!)

Do I try to pay off mortgage or carry on with my 150 monthly interest payment (with 12 years left). I hate owing money but do I need to think of mortgage as debt or leave it for the moment.

A curious dilemma but I hope it will make sense to someone and they can give me some clarity.

Thanks in advance

rumble55 · 14 February 2018 at 1:31AM

Hi, pay off your mortgage - it's an incredible feeling! Whatever the world throws at you you'll be able to cope with.

AnotherJoe · 14 February 2018 at 9:07AM

Paying it off leaves you with a decent amount for emergencies and also likely will give you a better effective interest rate on your money than you are getting now. Eg if your mortgage rate is 3% (my guess from your payment) what rate are you getting on that £76k savings ? Probably not that much.

It will also release the £150 a month, that could go into a high rate savings account.

Only potential issue, is there an Early Redemption Charge you'd have to,pay ?

Mahsroh · 14 February 2018 at 9:07AM

Bitlost11 wrote: »

Do I try to pay off mortgage or carry on with my 150 monthly interest payment (with 12 years left).

Admittedly I'm no expert in interest only mortgages, but presumably if you pay off the mortgage in full, there will be no more interest to pay?

juniordoc · 14 February 2018 at 10:19AM

You could look at switching to a repayment mortgage so could keep most of the savings for now but at least you'd be working towards paying it off, by the time you reach retirement age is a good goal.

dimbo61 · 14 February 2018 at 7:43PM

You have savings of £76,000 and your not in good health or working.
If you can pay off your mortgage with no fees to pay I would do so.
You can't claim any benefits if you have £76,000 in the bank.

Thrugelmir · 14 February 2018 at 7:48PM

dimbo61 wrote: »

You can't claim any benefits if you have £76,000 in the bank.

Was intending to say something similar.

Bitlost11 · 17 February 2018 at 11:23PM

Thank you all so much !!!55357;!!!56397;

enthusiasticsaver · 18 February 2018 at 12:27AM

Presumably you will have to pay it off eventually. What was the original term and what were the plans for paying it off?

Lenders don't like interest only mortgages so it might be best to have some plan to repay.

As someone else pointed out you will be excluded from some benefits if you have that much in savings.

silvercar · 18 February 2018 at 9:33AM

Im not sure I would pay it off. I would keep the mortgage amount aside so I knew I could clear it if necessary and at the term end.

Depends on your health, you may decide that should your health deteriorate further, you would prefer to take world cruises and not worry about your mortgage. Or your health could improve and you earn again.

I would think that once cleared you can never get the savings back, so I would be reluctant to lose the savings at this point.

Bitlost11 · 27 February 2018 at 12:40PM

Thank you silvercar, I had wondered similar myself. Enthusiasticsaver - I am fortunate enough to know that I will inherit (on the death of my parents) enough to pay it off, and alternatively my life insurance policy will more than pay it, should I go first.

Interest only mortgage - do I pay it off

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