Pay Off The Mortgage?

[PurpleParis]

I should be inheriting some money before too long. I have about £65,000 left on my repayment mortgage, probably about 15 years. I think the money will be enough to pay off the mortgage, should I do this? I could do with freeing up £500 a month...but are there any reasons to just keep paying the mortgage?

[Hymie]

Given that the mortgage interest rate will be higher than any savings interest rate available – your best return will be achieved by paying off the mortgage.

However, if you don’t have savings to last at least 3 months (preferably 6 months), then ensure you have a savings buffer before paying off the complete mortgage.

Don’t forget to check that your mortgage provide will not sting you for some ridiculous charge for paying a lump sum off your mortgage (some do).

[Tilly2]

Pay off your mortgage. It's like getting your life back.

[bhg481]

I agree absolutely with Hymie.

[Tilly2]

Hymie, why the savings buffer?

[vetuste_ennemi]

Generally speaking, Purple Paris, pay off your debt starting with the most expensive to service such as store cards and credit cards.

There's no value in saving the money as Hymie points out: the interest will be lower than the inflation rate.

If you save £500 a month by paying off the mortgage you're debt-free and quids in.

[ubasses]

The savings buffer of the recommended 6 months outgoings allows you to pay all bills should you end up losing your job, or suffering any long term illness.

[vetuste_ennemi]

//why the savings buffer?//

Because a contingency fund makes sense. But if you save the £500 a month even at today's interest rates you'd end up with the best part of £20,000 in three years.

I hate debt, and once you're free of it you're, well, Tilly at 22:18.

[JimF]

A savings buffer is a good thing to have if you're still employed, just in case the worst comes to the worst and you get laid off / made redundant / become unable to work for whatever reason.

However, if you feel your finances are pretty stable and secure, then paying off the mortgage is definitely the way to go.

[Hymie]

Hymie, why the savings buffer?

A: If you loose your job tomorrow, who will buy your food and pay other bills until you get another job?

[Tilly2]

In the olden days, you used to get some kind of tax relief if you were paying a mortgage. I don't remember the details now.

All I remember is the relief of paying off our mortgage and not having to find an enormous sum of money every month. It was like winning the lottery.

[Hymie]

I am mortgage free – but somehow still manage to spend most of my salary each month.

[Old_Geezer]

One needs enough money on easy access to ensure not needing to borrow at high rate. Once that's covered, get rid of debts starting with the most expensive.

[ubasses]

Tilly, you are thinking of Mortgage Interest Releif as Source (MIRAS). Abolished about the beginning of the 2000 tax year.

[Peter Pedant]

yes pay off your mortgage

if you are adventurous you may think of buying a house to let having done all the sums on house prices, further mortgages and rent.

mortgage interest ( not capital) is now bec oming less tax deductible which means that the window may close

so it might be a good idea in Manchester ( you an expect 5-8% return on capital) and not such a good idea in the south west ( 3%)

otherwise pay off the mortgage and get mortgage freedom

my cousin lost all her inheritance by bad deal after bad deal (she still thinks up bad deals but cant afford them now) and I er didnt

[jno]

Martin Lewis agrees, but note the warnings

https://www.moneysavingexpert.com/mortgages/mortgages-vs-savings/