Should I Pay Off My Mortgage Early?
Ask a Question
We are about a year off from completing our repayment mortgage. In your opinion is it better to pay off fully or hold off the last bit in case we need to borrow (loan) for any other reason and would accelerate preliminary reputation checks rather than using a different company or starting over? My parents did this and sister is considering doing also.
It depends on a number of factors. Do you mean paying it off early or just making the monthly payment till it is paid off? Also would you be planning to borrow off your home? Financial checks don't take that long to do, even if you are with a certain company they will still have to do the same financial checks before approving a loan.
JLouM I would continue to pay it off every month. If you can afford to save money too then do that, put it into a high interest (well as high as you can get now) account. If there is an unexpected expense you can use this and get a loan if necessary. You will have paid off the mortgage so why not put that money into savings? You are used to paying it out every month so why not pay it into a separate account and let it build up. That's what I would do.
We are in a similar position but are holding back for a short while. I am now in a position to pay the remaining mortage off as we do have the cash but its also a handy pot for unexpected events - we had to replace the roof this year and could end up having to replace the boiler soon so have opted to hold back for a bit. Hopefully in about 6 months we will go for it. Not sure if this is the best option financially but its working for us
Pay off your mortgag, if you have a sudden unexpected expense then take out a zero % credit card.
I'd pay off the mortgage if you have spare funds. If you have a solid asset like a house with no mortgage you can borrow at low rates. However perhaps not as low as your mortgage rate depending on what rate you are on. Ultimately you want to avoid paying interest which is dead money. As Pjran has stated there are 0% credit card deals. Some of those are 0% for new purchases but others are only for transfers of debt from other credit cards and there is a one off transfer charge.
Once your mortgage is paid of course suddenly you are a lot richer as you no longer have any monthly payments for the mortgage so you can accrue a lump sum quickly for other purchases. A good life goal is to pay as little interest as possible so make sure you have no outstanding credit card debts too which have ridiculous interest rates, always pay in full each month. Also reduce vampire payments i.e. monthly payments you don't really need for products and services or change to cheaper products. Car and home insurance should always be paid yearly to save on additional costs.
I always remember my old boss who was in the forces and therefore knew other people's wages by rank and 2 people had the same wage but one lived like a rich man and the other pretty much a peasant. One was frugal and would never buy a new car for example and had a home he owned the other wasted money constantly and rented. One would only buy discounted holidays and the other would just buy holidays at the full price rate etc.
I paid my mortgage off earlier this year. I now save what my mortgage cost (maybe a bit of extra spends especially at xmas). The feeling of being mortgage free and owning my home outright is wonderful, to be able to save too in a savings account that pays me interest, well to me it's a win win.
For me i always think it’s better to get stuff paid off asap then start saving again. But ofc it all depends on individual circumstances
Thank you for all your replies. We don’t have spare funds and we have never owned a credit card in our lives so would have to be ‘checked’ for applications which is why I wondered if already with lender for mortgage might get past that but maybe not.
Join for free to get genuine deals, money saving advice and help from our friendly community
Chief Bargain Hunter
