To Pay off or not pay off?

A question about : To Pay off or not pay off?

Evening,

Just noticed this board what an excelent idea, I have been thinking of doing this for the last 2 months. My morgage is 16,680 ish by july I should be Ј1000 shoft of paying it off, my morgage is an offset and i have the facility to withdraw overpayments and reduce the cost instead of the term ( Currently set to reduce term) I was thinking that if i paid off all but Ј1000 I could leave it open for the remaining 192 months making small payments and still have the money in the house (litteraly) for any emergancies as my emergancy fund would then be in the morgage (Till i can build another emergancy fund from the reduced payments).

Any thoughts on this ?

Best answers:

• It sounds like a good idea. Apart from the benefit you have identified, I've also heard that leaving a small amount outstanding on the mortgage can benefit you financially as the building society then stores the deeds 'free' for you. (If you pay the mortgage off, you have to find somewhere very safe to store the deeds. I think. But this may have changed now - did I hear about a computerised system that means that deeds are less crucial?)
• I kept this option open for a while when I paid off my mortgage. I had a flexible mortgage which allowed me to 'redraw' any overpayment. I saved until I had an emrgency fund before letting go of this safety net.
• Thats my plan I may actualy be able to reduce the payment to Ј1.55 a month by july (all things going to plan) and as my current account only pays 0.1% interest and is currently offset I may just leave it at the Ј1.55 a month for the rest of the term.
  Although may be a little dishartening that a macdonals will be more than my morgage payment .... a big mac and fries or pay another month off .... mmmm
• We have a current account mortgage with the RBS and have paid off Ј40,000 over the last couple of years withe some judicous money-saving and cashing in the endowment. We now owe Ј10,000. I could cash in some premium bonds which we bought with my husband's redundancy money a few years ago, and clear it off. But because we put every penny we have through the account, often we are only Ј3,000 - 4,000 "overdrawn". The interest charges are about Ј35 per month. I wonder whether we should pay off the mortgage or if it's worth paying the interest to have that Ј10,000 cushion. I'd be grateful for your thoughts.
  Thanks
  Lynne
  The Stephen Sondheim Society
• Premiun bonds prizes equate to a tax free rate of just over 3%, which is lower than the charges on a normal mortgage rate.
  However, on Ј10000, you might earn prize the equivalent of Ј25 a month which is less than your Ј35 cost
  However, it is pretty marginal so given that you have achieved this so far by keeping the pressure on yourself, it may be worth carrying on as you are until it is all gone