A question about : Invest or Pay off
We are in the very fortunate position of being able to pay off our Ј70K mortgage thanks to a retirement commutation. However a financial advisor suggested this may not be the best way of using the money and it should be invested instead as this would show the best return in the long term. The monthly payment is not a problem. His logic was that Ј70K invested over the remaiining term of the mortgage (which is covered by 2 endowments) would show a better return than paying it off. My thoughts are the return would have to be in excess of 5% per annum and we could still invest the money saved on the repayments whilst we do not need it to boost our income. I don't want to take any investment risks where the value of the commutation could go down. But I would welcome the opinion of others.
Best answers:
- He's right up to a point. Even now, you have a good chance of beating the mortgage rate by investing in medium/high risk.
However, given you're retired (?) and are risk-averse, you should IMO pay off the mortgage. - Id pay the morgage off and invest the payments you would ahve made to the morgage after all it will be free money once the morgage is payed off ... if there is a slump in the housing market and your investments you stand to loose double.
- I agree with Roswell. I would pay off the mortgage. Then use your mortgage payment money to invest, or go on holiday and enjoy your-self, after all good moneysavers need to relax too especially after the biggest debt known namely the dreadded mortgage is payed off.
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