Mortgages - would you pay it all off if you could?

Neilybob · September 2023

Pay it off!

The amount you will safe in interest alone warrants it. I’ve loved to have £850 extra in my pocket every month and not have to owe anyone anything.

RaymondLin · September 2023

Neilybob said:

Pay it off!

The amount you will safe in interest alone warrants it. I’ve loved to have £850 extra in my pocket every month and not have to owe anyone anything.

Not always true though, without knowing the numbers.

Some people, like my boss, locked in like a 10 year mortgage at like 1.5% when it rock bottom. He can get 5% in a few easily access accounts now. Granted he will need to pay tax over £500 a year for his salary. But ISA will get you 4.5% tax free.

If you have £100k in savings earning 4.5% tax free and a £100k mortgage at 1.5% interest. You are are better off NOT paying it off.

It all depends, and you always have that £100k in the bank anyway if you really want to pay it all off*.

*penalty fees and compound interests, or £20k ISA annual alloance aside, so £100k needs to be accumulated overtime.

Philly_Q · September 2023

I paid mine off about 10 years ago. It's amazing how much money has accumulated since, without me actively trying to save. That said, I haven't done anything to invest it wisely either, it's just sitting in the bank.

guitargeek62 · September 2023

I’d love to pay mine off, but given that I’ve got ~£300k left to go that’d have to be a v.nice windfall indeed to allow for that anytime soon!

TheMarlin · September 2023

Pay it off.

I’ve heard from a friend in international banking that they’re predicting crazy UK interest rates on mortgages within a year.

Whether that’s true or not, no idea.

LionAquaLooper · September 2023

TheMarlin said:

Pay it off.
I’ve heard from a friend in international banking that they’re predicting crazy UK interest rates on mortgages within a year.

Whether that’s true or not, no idea.

I would've believe that had I not seen on the news yesterday that experts also predicted that inflation wouldn't fall this week. But it did!

TTony · September 2023

Something to keep in mind ...

You might be able to pay off your debt, but still keep the mortgage facility.

By which I mean, reduce the debt to £0 ("pay it off") so you've got no more interest charges, payments due, etc, but leave the account open. That way, should you ever need quick access to a significant amount of money (the old agreed mortgage amount), it's there, ready and waiting.

I say might because that'll depend on your agreement and the lender.

Musicwolf · September 2023

TTony said:

Something to keep in mind ...

You might be able to pay off your debt, but still keep the mortgage facility.

By which I mean, reduce the debt to £0 ("pay it off") so you've got no more interest charges, payments due, etc, but leave the account open. That way, should you ever need quick access to a significant amount of money (the old agreed mortgage amount), it's there, ready and waiting.

I say might because that'll depend on your agreement and the lender.

When I 'paid mine off' (back in 2000) I actually just reduced the debt to £0.50 in case I ever needed to re-mortgage. It also meant that the deeds were kept in storage for free.

MrTee · September 2023

Musicwolf said:

TTony said:

Something to keep in mind ...

You might be able to pay off your debt, but still keep the mortgage facility.

By which I mean, reduce the debt to £0 ("pay it off") so you've got no more interest charges, payments due, etc, but leave the account open. That way, should you ever need quick access to a significant amount of money (the old agreed mortgage amount), it's there, ready and waiting.

I say might because that'll depend on your agreement and the lender.

When I 'paid mine off' (back in 2000) I actually just reduced the debt to £0.50 in case I ever needed to re-mortgage. It also meant that the deeds were kept in storage for free.

How does this work? When your debt is 50p do you just take out an interest only mortgage and pay pennies per month? Can't imagine the type of payment plan/mortgage you'd get?

Rob1742 · September 2023

I’d pay it off, unless are considering having to borrow money shortly after for a car, or home improvements etc.

The mortgage would be the cheapest way to borrow money, so I wouldn’t pay off the mortgage and then need to borrow for something else.

With regards to after you pay it off, you do feel really great for a good while afterwards

Keep copies of the final balance and payments as a year or so after paying mine off I went for another mortgage and the lender wanted proof I had payed it off. I didn’t keep any paperwork and found it difficult proving that I didn’t have a debt. I kept on asking them how I am supposed to prove I don’t have a debt. We were going round in circles for a good while after with the lender.

Stratavarious · September 2023

Paid it off in my 40’s and essentially immediately retired early to gig three or four nights a week for the gear fund and I can make pin money for bills & savings consulting the odd couple of days.

Life changing freedom,, yep. Once you separate work from the paying off of long term debts, everything about work changes.

joeW · September 2023

Be careful just putting it in a saving bond as you will have to pay tax and that can mess the economics massively. But if you are borrowing at just over 1%, I’d buy a low coupon treasury bond from the UK govt as you only pay tax on the interest not the cap gain. So effectively you can get over 5% and pay almost no tax and it’s government risk. I own some of Jan 24 0.125% and Jan 0.25% both yielded well over 5%.

Musicwolf · September 2023

MrTee said:

Musicwolf said:

TTony said:

Something to keep in mind ...

You might be able to pay off your debt, but still keep the mortgage facility.

By which I mean, reduce the debt to £0 ("pay it off") so you've got no more interest charges, payments due, etc, but leave the account open. That way, should you ever need quick access to a significant amount of money (the old agreed mortgage amount), it's there, ready and waiting.

I say might because that'll depend on your agreement and the lender.

When I 'paid mine off' (back in 2000) I actually just reduced the debt to £0.50 in case I ever needed to re-mortgage. It also meant that the deeds were kept in storage for free.

How does this work? When your debt is 50p do you just take out an interest only mortgage and pay pennies per month? Can't imagine the type of payment plan/mortgage you'd get?

I didn't pay anything. This was with The Halifax and it was their suggestion, I don't think that they bothered charging interest below £1. In the end I only did this for a couple of years as I bought a new house for 'cash' and moved the deeds to my solicitor's deed-store.

This is all 20 years ago, so no doubt things have changed.

Sporky · September 2023

I think deeds are now all online, so no need to pay anyone for storage.

Howdy, Stranger!

Categories

In this Discussion

Become a Subscriber!

Mortgages - would you pay it all off if you could?

Comments