Paying off a Mortgage

[Mr Tom Morrow]

We paid our off circa 2.5 years early by overpaying each Month for years.

However within 2 Months I wondered where that money was going as it just got absorbed into other things. Hence I set up another account and each Month until I retired I transferred that money into the new account. Nice to have a lumps sum.

[RachaelC]

Originally Posted by Perthite

Is anyone else wondering enviously how so many posters have been able to pay off their mortgages?!

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Yes! I can’t wait to be in that position, I can imagine it feels amazing.

Sadly, living in the South East means I have a big mortgage, so it will be a long time before I am in that position!

[Stitch & Smudge]

Originally Posted by dx4100

But they don't have any other debts so this advice doesn't make sense?

Pay off the mortgage you lucky person. wish I could 😀

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True, but I was generalising as it may be of use to others.

[daytonababe]

Originally Posted by Stitch & Smudge

I’m going to go against the flow here. Mortgage rates are at a historic low. If you still have a decent sized mortgage then now is the time to remortgage on a decent fixed term. You’ll find that the interest payable is negligible. Credit card debt however carries a far higher repayment percentage. Paying off short term debt far outweighs a mortgage. Also for anyone starting out, borrow over as long a term as possible. Yes, you have a mortgage for longer but over time inflation erodes the amount you require to repay. (i.e. a loaf now costs £1 but in 25 years time it’ll be £4 so in relative terms in 25 years your mortgage will only be costing you a quarter of what it does now. Figures for illustration only.)
Edit to add, we didn’t pay ours off as we would have had an early repayment fee. Yes, I am that tight.

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What’s the point of that when they have no other debts.

Why owe on a mortgage if you don’t need to makes no sense.

[vampiress88]

Originally Posted by Perthite

Is anyone else wondering enviously how so many posters have been able to pay off their mortgages?!

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Maybe it’s age? Assuming you got a mortgage in 20s then it will probably be gone by 50s etc

[wanye]

paid ours last year, credit rating has dropped, but as long as we keep using our credit cards (and paying off in full each month) then our credit rating has taken a dip, but not anything worth worrying about (that i've noticed so far)

if we didnt have/use the credit cards, i could see things dropping enough to potentially affect getting some lines of credit in future, so we keep two cards each and use them both regularly instead of debit

[catherinesian]

Pay it off unless you have (or might want to) have a loan for something. There's no point paying off a mortgage at, say 2% interest rate and then next year getting out a loan for something else (car, etc) at 5% or whatever they are these days.

I am jealous, we've got a huge mortgage, although once we have finished our house we will start seriously overpaying it.

[Stitch & Smudge]

Originally Posted by daytonababe

What’s the point of that when they have no other debts.

Why owe on a mortgage if you don’t need to makes no sense.

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Because it means that you have money in the bank for those rainy days, a new car, holiday. The list is endless. Or, as in my case it avoids mortgage exit fees. My mortgage is tracking the base rate so at the moment is almost interest free and there’s no benefit to paying it off. That may change as and when interest rates rise but at the moment I have the cash to pay any unexpected expenses without having to worry about it.

[disney_l81]

Originally Posted by vampiress88

Maybe it’s age? Assuming you got a mortgage in 20s then it will probably be gone by 50s etc

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I was 22 when I had my first mortgage and was 38 when it was paid off. We were very lucky, but also worked very hard to pay it off.

[400ixl]

There is something to be said to be ensuring that you have a solid emergency fund set up (say 6 months of living costs) before paying off the mortgage. The last year has shown that you don't know when you could be in a position of a reduced or no income through sickness or pandemic.

You obviously have to take into account other protections you may already have in place such as enhanced sickness pay you may get, redundancy pay etc.