What Am I Missing?

Hi Folks, This is my first post so please be gentle....
If you successfully pay off your mortgage, doesn't it effectively mean that you then have thousands of pounds tied up in the building that is not working to make money for you? I ask because I am just about to receive a lump sum and have been advised that it would be better to invest it than clear the mortgage.

All comments welcome,

Steve - " A bear of lttle brain"

Comments

  • moggins
    moggins Posts: 5,190
    Combo Breaker First Post
    Forumite
    I think your best bet would be to use the mortgage overpayment calculator and see how much interest you would save by paying off your mortage and then to calculate how much interest you would earn by investing it for the same number of years you have left to run on your mortgage? Whichever figure is the greater then that is the one you should choose.
    Organised people are just too lazy to look for things

    F U Fund currently at £250
  • Imelda
    Imelda Posts: 1,399
    Name Dropper Combo Breaker First Post First Anniversary
    Forumite
    Depends how you look at it, if you think property prices are going to rise then you will see some benefit from the investment made in your property (as long as you down rather than upgrade). By paying off your mortgage you will be saving thousands in interest payments, more than you will probably be able to get from interest on the high street. Could you not invest the money that you would have used to pay your mortgage each month? It's just a suggestion, I am sure plenty more people will be along with sound advice in a mo!
    Saving for an early retirement!
  • Joe_Bloggs
    Joe_Bloggs Posts: 4,535 Forumite
    There may be penalties by paying off too much too soon. Reearch your mortgage terms an conditions. Ask your lender for a redemption quote. This should include all the fees due on redeption to date and a prediction of the costs for at least a few weeks into the future.
  • Hawksmuir
    Hawksmuir Posts: 144 Forumite
    SG_Glevum wrote:
    Hi Folks, This is my first post so please be gentle....
    If you successfully pay off your mortgage, doesn't it effectively mean that you then have thousands of pounds tied up in the building that is not working to make money for you? I ask because I am just about to receive a lump sum and have been advised that it would be better to invest it than clear the mortgage.

    I view a mortgage as a debt like a Loan, or credit card. After clearing the most expensive debts (loan & CC) I am now looking to clear the last of my debts (mortgage) before I start saving.

    But this is purely my view.
    Mortgage Free Wannabe 2009 Challenge
    Mortgage Free Wannabe 2009 Challenge £1,000 overpayment.
    Total Mortgage £90,000 (as at 01/01/09)
  • I remortgaged to buy an additional property,I am looking forward to getting mortgage free, if you do get rid of a mortgage there is nothing to stop you investing in other things. I just hate paying the bank all that interest a month whne I could be enjoying it!!
    It is a debt and I'm doing all I can to reduce it though.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 342.5K Banking & Borrowing
  • 249.9K Reduce Debt & Boost Income
  • 449.4K Spending & Discounts
  • 234.6K Work, Benefits & Business
  • 607.1K Mortgages, Homes & Bills
  • 172.8K Life & Family
  • 247.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards