Paying house off early

[SilverFox2]

Some time since I paid off my mortgage so things have probably changed but I paid it off gradually by selecting to pay off the borrowed capital only rather than the total debt which includes interest.

By doing capital only you automatically reduce interest to be paid in the future.

The other thing to remember is because you pay a fixed sum each month depreciation helps for your payments further down it's life.
However also early years are paying off mainly interest on the higher borrowed amount so later years you are paying off mainly capital with little interest.

 

[staffsblue]

I paid off my mortgage when I moved from Yorkshire to Staffs.
I had an endowment mortgage and continued to pay the endowment payments until maturity date 14 years after the house sale.
Ended up with a nice lump sum which went a long way towards being able to take early retirement.

 

[Paul1970]

At one time it was advisable to keep your mortgage running and not pay it off because we got tax-relief on mortgage payments. Things have change we don`t get tax-relief.

As soon as the Miras was scrapped I paid of my mortgage saving thousand of pounds in interest payments. It also feels like a weight has been lifted from your shoulders, now that your payments aren`t flooding out of the bank account every month.

My advice would be to save what you would pay off your mortgage every month.

I can save that monthly payment quite easy so that’s a big save every month . Can’t wait to have the feeling of being mortgage free tbh .

 

[carlosthejackal]

No brainer , pay it off

 

[BTH]

Paid mine off last year. Best thing I did. Although if you do, your credit rating will probably take a hit!

 

[paulchapo]

I’m looking to pay my mortgage off early in the next few weeks but have also been told to leave the money in an account and let it build Interest bug was loooking forward to being mortgage free so now I’m having doubts what to do . Anyone else done the sane ?

It's simple maths. If you can earn more in interest than you're paying to your mortgage provider per month keep your money in savings. I would guess that money is always going to be there so you can do it anyway if your circumstances change.

 

[meltonblue]

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%)

Completely agree with this.

 

[Uwe Already]

How did you manage to pay it off so early if you don’t mind me asking?

The clues in the name, when he was 32 the average mortgage was £500…

 

[Uncle Wally One Ball]

How did you manage to pay it off so early if you don’t mind me asking?

I paid mine off through sheer hard work and commitment to doing it. Every bit of overtime I earned in my job wasnt through choice it was just the nature of it so when paid it Id put it straight into the mortgage so I didnt see it. I do work hard so any extra overtime shifts never got turned down, and that money went straight in to mortgage too.
I get its a cheap loan really, but the weight off your life is immeasurable.
Ive paid what I did pay to the mortgage into a bit of scheme so now the interest rates are more normal Ive started to realise a bit of back and I think Ive earned it. Getting a decent return now the other way, and if these rates carry on it means I can jack work in at my time rather than look for other work when I can retire from my current job. Short term pain while Im earning, long term gain to put feet up.

Never leased a German car either. Which helps

 

[hammocity]

Unless you are tied in to a fixed term, probably better than today’s rate, and you can pay the mortgage off, then do so. Any spare cash can be invested through 20k per person pa ISA’s at anything from 5% upwards at the moment.

As an FOC, my only advice is pay your mortgage off early, retire when you can (or just do part time) and do a plan of your income up to around 75 when most slow down. Worst happens and you can draw equity from your home but the state pension isn’t that difficult to live on in older age, me and Mrs H will be getting £22k pa in around 18 months, don’t need a massive amount over that but I’ll blow a good few quid on frivolities whilst I can.