Paying house off early

[Citizen of Legoland]

All my spare money goes on clearing my mortgage but the company that sorts my pension say to pay it into that instead
Im miles off and we arent talking largw amounts and im certainly no expert but i just want that mortgage cleared.

By not having the mortgage itll give me options to either slow down with work or save what i would normally pay into the mortgage

Pensions haven’t performed well at all over the last few years, which suggests there may be a correction soon. I had some extra cash earlier this year which I could have used to pay off the mortgage but I put it into the pension fund instead. I’m only paying 2% on the mortgage so it made sense but I have also decided to keep working for at least another 5 years before I need my pension fund to give it time to work.

 

[John Wayne]

I paid mine off in 2021 having lost both of my parents. It was one of the few things I think I got right because I could see that 18 months of the government rapidly printing money would be paid for through higher interest rates and inflation. After more than a decade of historic low interest rates (actually being kept artificially low by the US Federal Reserve and The Bank of England), it almost felt inevitable. Interest rates aren't actually that high but it feels like they are because they had been so low for so long. The problem is the speed at which they have risen against a backdrop of massively inflated property prices. I left myself with little in the bank but the security of having a home I own outright is massively liberating. The money saved can quickly build up your savings pot in no time.

 

[Bluesince1979]

Pensions haven’t performed well at all over the last few years, which suggests there may be a correction soon. I had some extra cash earlier this year which I could have used to pay off the mortgage but I put it into the pension fund instead. I’m only paying 2% on the mortgage so it made sense but I have also decided to keep working for at least another 5 years before I need my pension fund to give it time to work.

For me its being mortgage free. Ill never truly retire and unless my mind set changes ill keep going.
I do quite a physical job so couldnt do it into old age but ill always do something i think, whilst i can.

So me paying off my mortgage as quick as i can may not make total financial sense , its more about mind set

 

[flook]

.had the money in premium bonds and used that. PBs giving about 2% return if you're lucky.

think you're unlucky, 4% exactly over the last 12 months from PB's, not earth shattering but good enough to leave it there on the off chance of a big win.

with regards the mortgage question, if you can get savings rate better after tax than your mortgage rate, then savings, otherwise pay it off would be my uneducated advice

 

[Tuearts right boot]

think you're unlucky, 4% exactly over the last 12 months from PB's, not earth shattering but good enough to leave it there on the off chance of a big win.

with regards the mortgage question, if you can get savings rate better after tax than your mortgage rate, then savings, otherwise pay it off would be my uneducated advice

That ' Big One ' just keeps you hanging on.......

 

[kaz7]

Biggest debt you will ever have , you are paying huge interest on it , pay it off asap , huge weight off your shoulders and you can save the same amount each month instead, martin lewis always says get rid of your biggest debt first

 

[flook]

That ' Big One ' just keeps you hanging on.......

it does, stops me spending it on wine though

 

[Manchester33]

Biggest debt you will ever have , you are paying huge interest on it , pay it off asap , huge weight off your shoulders and you can save the same amount each month instead, martin lewis always says get rid of your biggest debt first

I disagree with your advice.

Yes, a mortgage is usually your 'biggest' debt. But it's also usually the cheapest debt you'll ever have. The best way to clear debt is to first pay off the highest-interest debt, not the biggest debt.

Mathematically, paying down your mortgage doesn't make a lot of sense, and I personally don't believe it makes much sense from a security/risk perspective either. Someone with a £100k mortgage AND £100k invested into an S&S ISA is much more flexible/secure than someone with no investments and no mortgage.

People obviously have different goals, but the general rule of thumb for investing surplus money is:

1 - Save an emergency fund equivalent to 3-months living costs
2 - Pay down high-interest debt (anything over 7%)
3 - Save an emergency fund equivalent to 6-12 months living costs (depending on risk tolerance).
4 - Invest into a SIPP
5 - Invest into a S&S ISA
6 - Pay down low-interest debt (anything under 7%)

 

[Manchester33]

We're paying ours off on an interest only BTL type mortgage....had the money in premium bonds and used that. PBs giving about 2% return if you're lucky...mortgage costing 5-6%. Ask a financial advisor but it's pretty much common sense. Might be worth keeping a small mortgage just for future additions though......

Sack off the Premium Bonds. You'll get a much better return putting the money into a S&S ISA (Like Vanguard LS100 fund). IF you don't particularly need the money, a SIPP is even better because you get an immediate 20%/40% boost depending on your tax rate.

You'd beat 2% in most savings accounts now.

 

[Scottyboi]

Sack off the Premium Bonds. You'll get a much better return putting the money into a S&S ISA (Like Vanguard LS100 fund). IF you don't particularly need the money, a SIPP is even better because you get an immediate 20%/40% boost depending on your tax rate.

You'd beat 2% in most savings accounts now.

I'm getting 4.35% just in a Kroo account and you get £15 via tcb. Covered for upto £85k too just a bog standard bank account that is fee free abroad.