# Do I pay the mortgage off?



## Avanti (Jan 17, 2006)

My mortgage is low now and I over pay (3*) there is about 2yrs left to run, I have some money sat in a savings account paying me 0.1% gross  
My morgage rate is 1.19 and will go up to 2.5% next month is it worth me paying it off in a couple of months?
I hear different stories about if it is wise to clear off a mortgage


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## Exotica (Feb 27, 2006)

I believe its always wise to pay it off if your in a position to.


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## little john (Jun 10, 2007)

If the interest rate on the savings was better I would keep the savings but they are totally on their **** at the moment. If you can find a better interest rate then move the savings but I doubt you will without paying for the account. i would look at paying off the mortgage before the interest rate rises. then stick your mortgage payments in to a savings account if you can afford to and let it build for a few years.


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## NKS (Feb 22, 2007)

Clear it off if you will not be charged any penalties one less monthly outgoing you neededn't worry about - 0.1% gross is pants.


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## dew1911 (Jun 9, 2009)

Agreed - Honestly your savings are acheving nothing there and so pay it off and be a good sum better off a month!


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## faithless (Jul 8, 2008)

i also would pay it off, then rebuild your savings up over time
by swapping the amount that you would pay on your monthly 
mortgage payments (or less) to pay in to the savings account....


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## Avanti (Jan 17, 2006)

Cheers guys, money is no good unless it is being spent, the other option was to stop the monthly saving and add that further to the mortgage payments, there are no penalties on this scheme as it is a straight repayment plan.


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## Guest (Jun 30, 2009)

Unless you need your savings for something (rainy day etc), I'd pay off the mortgage and then build up the savings again. If you keep the mortgage going you are still paying an interest fee each month - which is lost money essentially.

Basically, work out how much it will cost you to keep the mortgage until the end of the term. Then compare this to paying it off in one lump sum. The difference will be extra money in your pocket (or bank account ).


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## Gruffs (Dec 10, 2007)

Repay all bar £1.

That way, the interest is negligable and you won't incur any early settlement fees.

Savings are useless unless you use them. And, you can build them up again twice as fast now.


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## Avanti (Jan 17, 2006)

Phisp said:


> Unless you need your savings for something (rainy day etc), I'd pay off the mortgage and then build up the savings again. If you keep the mortgage going you are still paying an interest fee each month - which is lost money essentially.
> 
> Basically, work out how much it will cost you to keep the mortgage until the end of the term. Then compare this to paying it off in one lump sum. The difference will be extra money in your pocket (or bank account ).


Thats why the savings built up for the rainy day which never arrived 
However it does leave a nice deposit for a new car


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## Bigpikle (May 21, 2007)

sorry, but all this crap about savings are useless unless you spend it is total BS IMHO.

Savings are just that - a reserve to see you through the unexpected or to allow you to do stuff in the future. Those people who spend all their savings constantly are the same ones who end up with nothing.... Once you have a decent reserve behind you it really does enable you to take a different outlook in life. Knowing you have enough stashed away to never have to worry about paying a bill again, or can always take a foreign holiday etc is a great feeling 

Pat your mortgage off if you like, but only if you cant make more with the money invested elsewhere. No way would I use it as a 'deposit' for another car unless you really needed to - the balance would no doubt be funded by a far more expensive loan of some kind.

There is no real rush to pay off your mortgage really, as it does give you flexibility. Interest rates are so low that the amount you are paying in interest is really very small and it does mean your savings are there should you need them or want to invest them. If you pay off your mortgage you dont have any choices about what to do with the rest of your money until you saved it all up again...


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## APK (Oct 6, 2008)

Another possibility could be to look at remortgaging to a fee free offset mortgage, you could fully offset the mortgage, so it wouldn't cost you anything, but the funds would still be available to draw back if you needed to such as redundancy etc


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## eddie bullit (Nov 23, 2007)

all this talk of re-mortgaging and the like is just stupid!!! pay off your debt and then whatever happens around the corner you know that your house is yours and paid for..Trust me it's a great feeling. Then just save for a decent deposit for that car youv'e always promise y'self as a reward!! remember that we haven't a clue whats around the corner with our economy and never have to be honest and that's why I always clear my debts as fast as possible. It's better to be an interest reciever than a giver whatever the rate!!


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## Avanti (Jan 17, 2006)

Bigpikle said:


> sorry, but all this crap about savings are useless unless you spend it is total BS IMHO.
> 
> Savings are just that - a reserve to see you through the unexpected or to allow you to do stuff in the future. Those people who spend all their savings constantly are the same ones who end up with nothing.... Once you have a decent reserve behind you it really does enable you to take a different outlook in life. Knowing you have enough stashed away to never have to worry about paying a bill again, or can always take a foreign holiday etc is a great feeling
> 
> ...


The savings were just for that, however the other 'investments' put me £14k down in less than 2yrs , I could have paid the ,mortgage then , yes there is no rush to pay the mortgage, but at the same time the money sitting in the bank is not doing me any pleasure unless it is spent (on me) , fortunately I already achieve 3 or 4 hols abroad per yr (not luxurious but a hol is a hol) doing the maths if I paid the morgtgage off, I would replensih the savings to what they are in 12 months. The only reason to carry on paying it as it is, is that it is mainly capital as in only around £10/month is interest but in effect it would mean that I am 'getting' the mortgage rate as interest on the savings


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## Doc (Feb 2, 2008)

There was a similar thread to this on another forum, this post was interesting 



> if you repay your mortgage (Capital and Interest) with PAYE you are paying it off using money you have already been taxed on, but if you pay off the capital when you sell you are paying it off with untaxed income (assuming it has increased in value)
> 
> it only works if you believe that house prices outstrip all other forms of investment in the medium and long term, and from my 40 odd years of empirical experience this is true, but hey what the fvck do I know, apart from the fact that with property you are in charge of your investment, you don't pay upfront fees to some sharp suited shyster to "manage" it for you and on your PPR you get 100% tax relief on the capital gain


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## Epoch (Jul 30, 2006)

One thing to consider is your deeds to the house

Currently they will be with your mortgage company so that they can take anuthing you owe them from the sale of your house.

If you pay up they send them back to you, you will then need somewhere VERY secure (prefeably not under your bed) to put them which may well be a solicitors etc which will have a cost (which can be more than you think as loss could result in you loosing your house)

Might all seem a little dramatic but the cost of a tiny mortgage left could be less than the cost of deed storage


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## Avanti (Jan 17, 2006)

Epoch said:


> One thing to consider is your deeds to the house
> 
> Currently they will be with your mortgage company so that they can take anuthing you owe them from the sale of your house.
> 
> ...


I'm sure I have the deeds here (are they not stored electronically now?) 
I remember when I started the mortgage the 'deeds' for this and another property arrived , I took them to the bank and the assistant gladly snatched them from me, about 12-24months ago a bunch of paperwork arrived with a letter saying the bank need not keep them anymore


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## Epoch (Jul 30, 2006)

Avanti said:


> I'm sure I have the deeds here (are they not stored electronically now?)
> I remember when I started the mortgage the 'deeds' for this and another property arrived , I took them to the bank and the assistant gladly snatched them from me, about 12-24months ago a bunch of paperwork arrived with a letter saying the bank need not keep them anymore


Ah ok maybe i have it wrong then


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## lofty (Jun 19, 2007)

Avanti said:


> I'm sure I have the deeds here (are they not stored electronically now?)
> I remember when I started the mortgage the 'deeds' for this and another property arrived , I took them to the bank and the assistant gladly snatched them from me, about 12-24months ago a bunch of paperwork arrived with a letter saying the bank need not keep them anymore


The paper deeds are not needed,as they are all eletronic now.The deeds are just historic documents ,but have no use.


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## Avanti (Jan 17, 2006)

Epoch said:


> Ah ok maybe i have it wrong then


I will check, IIRC the banks can sell a storage box and the price was not expensive, I think they made their money on when the renter wanted to access the box


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## LeeH (Jan 29, 2006)

Exotica said:


> I believe its always wise to pay it off if your in a position to.


If you do your credit rating will suck.


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## Avanti (Jan 17, 2006)

LeeH said:


> If you do your credit rating will suck.


Why? modern myth now is if you run a credit card efficiently you are good to go (if needs be) :thumb:


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## Guest (Jun 30, 2009)

Epoch said:


> One thing to consider is your deeds to the house
> 
> Currently they will be with your mortgage company so that they can take anuthing you owe them from the sale of your house.
> 
> ...


I believe mortgage companys will let you pay all but £1 and still store the deeds for you.


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## LeeH (Jan 29, 2006)

If you already have credit yes.

But I 100% know that it will effect your credit rating, assuming that if you can afford to pay your mortgage off you owe nothing else. Hence you have no outgoings so no proof you can manage monthly payments.

Its a fact, I've seen it happen to my Mum who was refused a 30%APR store card as she owned NOTHING.


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## Guest (Jun 30, 2009)

^^^  :lol: :thumb:



LeeH said:


> If you do your credit rating will suck.


Is it not more of a case that if you have nothing owed on credit then you end up with no credit rating as opposed to a bad one? Ironically, I can see that it might end up effectively being the same thing


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## lofty (Jun 19, 2007)

Avanti said:


> Why? modern myth now is if you run a credit card efficiently you are good to go (if needs be) :thumb:


I was going to pay off my mortgage a couple of years ago but decided against it.I bought 2 investment properties last year and the mortgage advisor told me that I would have struggled to get the buy to let morgages if I didn't have a recent mortgage payment record.


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## LeeH (Jan 29, 2006)

Phisp said:


> ^^^  :lol: :thumb:
> 
> Is it not more of a case that if you have nothing owed on credit then you end up with no credit rating as opposed to a bad one? Ironically, I can see that it might end up effectively being the same thing


I guess no rating is the lesser of 2 evils but the end result is the same.

............computer say no....


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## Buck (Jan 16, 2008)

Avanti

Difficvult to say what to do exactly but as you are on such a low interest rate, even after the rise, I'd be tempted to pay off c.half the outstanding mortgage debt (difficult to say exactly as you don't say how much capital is left to clear) then keep the rest in a mixture of long term savings account (high interest) and an instant access account.

As a guide I was told you should ideally have access to 3-6 months of your annual income relatively easily if that rain day becomes a month or two.

CM


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## PootleFlump (Jan 1, 2006)

If you are earning 0.1% of interest on savings and shortly 2.5% on mortage, asumming no settlement fee I personally would pay the money off and immediately start banking the mortgage payments to build the savings back up.

The only other aspect I would consider is that saving provide some assurance against the unexpected so wise to keep some amount of saving just incase something happens that you hadn't planned for, perhaps reduce the period down to a year and keep some in reserve unless clearing the mortgage still gives you a nice reserve banked.


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## jazsarl (Aug 19, 2009)

> I was going to pay off my mortgage a couple of years ago but decided against it.I bought 2 investment properties last year and the mortgage advisor told me that I would have struggled to get the buy to let morgages if I didn't have a recent mortgage payment record.


Not strictly true. Yes it is important to show regular payments, and create a credit history but this can be done in several different ways.


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## ChuckH (Nov 23, 2006)

Go for it Mate Pay it off ! I did as soon as I was able And a great feeling it was !!!


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