Discussion in 'Finance, Property, Law' started by old_bloke, Sep 18, 2008.
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Is it a good time to pay a wodge of the mortgage or keep the cash in savings ?
All advice taken.
Speak to an independent Financial Advisor.
I think that reducing your debt should always be a priority. I have thrown spare cash at my mortgage for the last 10 years, and as a result I pay it off in a couple of months after on 12 years rather than the original 20.
I was in a similar position within the last 12 months. I looked at how much I would pay in interest as part of the mortgage and then looked at how much I would receive in interest from the highest interest rate account I could find (with no conditions - ie. immediate access).
I now have a much smaller mortgage.
Disclaimer: This is not advice.
If you find you miss it you are welcome to mine!!
I've been doing the same to reduce it, but after reading Martin Lewis' advice (moneysavingexpert.com plus Radio 2 regular) I decided to cash in my ISA's etc and get shot of the mortgage completely. The best savings interest still wouldn't have covered the mortgage payments, so why invest it to pay of the moneygrabbingbarstewards!!
Result - huge weight off my shoulders, but feeling a bit twitchy with little or no savings to start with (mind you the extra dosh should build the savings up a bit quicker now).
I always paid extra off the mortgage, I've been mortgage free for a couple of years now. Well worth doing.
Also remember that if you have the option on your mortgage (which lots do) of missing repayments so long as you have overpaid to date, then if you are desperate for cash then ask for a month of non-payment as you will have paid more for the last few months, so you get the benefit of paying off mortage early, and have a 'savings' pot to raid if desperate.
Disclaimer..I wouldn't take advice from me...so you shouldn't.
Whilst I understand why Msr recommends talking to an IFA, the simple answer is yes. But there are caveats to that:
Clear all other debts first (unless you have an HP style contract where you pay the interest, no matter what).
Build up a cash buffer in an ISA or similar account. You need 3 month's spending money in a buffer account. If the washing machine breaks tomorrow morning, Comet will sell you a replacement against the credit card but you have to clear that debt (you understand why, don't you?) no later than 56 days later.
There is a view that you should next top up your pension but we're in the military, so you can now pay off your mortgage. Keep an eye on the small print; most BSocs get shirty when faced with high levels of repayment.
Enjoy the warm feeling.
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