What do do when you're mortgage free?
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PasturesNew wrote: »At that age?
Knowing what I now know?
Seriously ...?
Remortgage/upsize to the HILT ...
It'll hurt at first, but when you're 50 you'll thank yourself as your downsizing at a future point, with a HUGE pot of "free money" will really buy you so much more than just sitting in this free house thinking "haven't I done well".
This is great advice and we've been thinking along the exact same lines. We are mortgage free in under a year if all goes to plan. We currently commit £2,500 per month towards being mortgage free
Our house is a large 3 bedroom (was 4 bedroom converted by previous owners) with a downstairs extension. It more than big enough for my small family (wife and 14 YO daughter)
Its in a nice area but its not our dream home and an ex LA place so it has its ceiling value.
By upgrading to a bigger house in an even nicer area...for our 2.5K a month we could probably stretch to 700K with a new 15 year mortgage (we are 44 & 45)
So the thinking is if we bought well, how much would or private detached 700K house be worth in 15 years? 800k? 900?
of course nobody can tell but we could sell and downsize for retirement with a nice chunk of equity....more than what we would have if we stay at our current house
Of course the downside is that massive mortgage payment for the next 15 years, whereas we have just 1 year to pay that currently.0 -
Thrugelmir wrote: »Downsize and make the process even quicker.
You'll need to increase this level of contribution if you want to enjoy luxury in your retirement.
Yeah, I know. Also saving considerably more than goes into my pension each month.
Could go part time as soon as we pay off our mortgage, with no savings if we wanted to. Over 50% of our costs wouldn't exist any more.0 -
PasturesNew wrote: »At that age?
Knowing what I now know?
Seriously ...?
Remortgage/upsize to the HILT ...
It'll hurt at first, but when you're 50 you'll thank yourself as your downsizing at a future point, with a HUGE pot of "free money" will really buy you so much more than just sitting in this free house thinking "haven't I done well".
There will only ever be two of us in the house, and we already have 4 bedrooms and two living rooms now. It's a bit ridiculous already!0 -
Do you hate work or hate your job? Changing to a different job that you are already qualified to do would be a much easier switch.
Otherwise you should look at retraining, but you'll need some money in the meantime.
A S&S ISA is more a regular long term investment, rather than somewhere you put a lump sum and hope it grows as when the market drops your existing units are worth less but new money buys more units & fingers crossed it will bounce back eventually if it's diverse enough.
You should set a number of years you will save for and select regular savings accounts or fixed rate savings that will get you the best return until then. If you are able to save enough then you could stagger it so that some money will become available in one year & some in two years.
I hate working. It's spending all day, 5 days a week working for someone else, who doesn't pay you what you're worth. We already have a few regular savings accounts which will mature mid year next year, for us to chuck straight onto the mortgage as overpayments.0 -
This is great advice and we've been thinking along the exact same lines. We are mortgage free in under a year if all goes to plan. We currently commit £2,500 per month towards being mortgage free
Our house is a large 3 bedroom (was 4 bedroom converted by previous owners) with a downstairs extension. It more than big enough for my small family (wife and 14 YO daughter)
Its in a nice area but its not our dream home and an ex LA place so it has its ceiling value.
By upgrading to a bigger house in an even nicer area...for our 2.5K a month we could probably stretch to 700K with a new 15 year mortgage (we are 44 & 45)
So the thinking is if we bought well, how much would or private detached 700K house be worth in 15 years? 800k? 900?
of course nobody can tell but we could sell and downsize for retirement with a nice chunk of equity....more than what we would have if we stay at our current house
Of course the downside is that massive mortgage payment for the next 15 years, whereas we have just 1 year to pay that currently.
That's the thing. I'd rather go part time, even if I had to work 2 days a week until I died, than continue working 5 days a week. You just don't get any time to do anything. How people manage with kids is beyond me.0 -
Dorian1958 wrote: »Putting the equivalent of the mortgage Into an ISA each month to help fund children's uni costs worked for me. Made it much less financially painful, (helped by living in Scotland, so no tuition fees.).
What costs?0 -
Are you sure you should be mortgage free?
E.g. the cheapest 50% LTV mortgage is about 1.20%. You can save in a 2-year fixed saving account, with full FSCS guarantee, yielding 1.80% to 2ish %0 -
SouthLondonUser wrote: »Are you sure you should be mortgage free?
E.g. the cheapest 50% LTV mortgage is about 1.20%. You can save in a 2-year fixed saving account, with full FSCS guarantee, yielding 1.80% to 2ish %
My mortgage interest rate is 2.02%
I'll happily sacrifice a small amount of savings interest for the security that comes with owning my whole house.
Opens up a lot of options in terms of employment (or not)0 -
SouthLondonUser wrote: »Are you sure you should be mortgage free?
E.g. the cheapest 50% LTV mortgage is about 1.20%. You can save in a 2-year fixed saving account, with full FSCS guarantee, yielding 1.80% to 2ish %
I agree. And it’s very easy to get more than 2% interest on your money, 3% at least.
fcFeb 2008, 20year lifetime tracker with "Sproggit and Sylvester"... 0.14% + base for 2 years, then 0.99% + base for life of mortgage...base was 5.5% in 2008...but not for long. Credit to my mortgage broker0 -
Steve123456789 wrote: »My mortgage interest rate is 2.02%
I'll happily sacrifice a small amount of savings interest for the security that comes with owning my whole house.
Opens up a lot of options in terms of employment (or not)
What do you mean by additional security? Not repaying the mortgage and investing the funds elsewhere may be a bit of a hassle, and of course you need to make sure that tax and mortgage fees do not eat up all the savings from this strategy (many people don't pay taxes on their interest income). But security, what security? As long as you invest in saving accounts backed by the FSCS, and the amounts are < £85k cover, I am not sure what the risks are.
If instead you want to invest in shares or funds, then, sure, there's the risk those investments will yield less than the mortgage rate.
You'd be giving up some flexibility, eg if you take out a fixed-rate mortgage you'd pay a penalty for repaying early, so it would be difficult to, say, move elsewhere after one year, but that's flexibility, not security. Also, tracker mortgages do not typically come with early repayment charges.
Another thing the OP might want to consider is, if he qualifies, an interest-only offset mortgage, like those of First Direct. For example, if I had £100k of savings and a £100k mortgage balance, I wouldn't repay it because I'd want to keep some savings for a rainy day. By offsetting those savings, you'd be paying no mortgage (no interest as the net balance is zero, and no capital as it's interest only), but, at the same time, if you ever need to access those funds (eg the car breaks down) you'd be paying an interest rate that would be higher than the best mortgage but lower than an unsecured loan.0
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