I should be inheriting some money before too long. I have about £65,000 left on my repayment mortgage, probably about 15 years. I think the money will be enough to pay off the mortgage, should I do this? I could do with freeing up £500 a month...but are there any reasons to just keep paying the mortgage?
Given that the mortgage interest rate will be higher than any savings interest rate available – your best return will be achieved by paying off the mortgage.
However, if you don’t have savings to last at least 3 months (preferably 6 months), then ensure you have a savings buffer before paying off the complete mortgage.
Don’t forget to check that your mortgage provide will not sting you for some ridiculous charge for paying a lump sum off your mortgage (some do).
The savings buffer of the recommended 6 months outgoings allows you to pay all bills should you end up losing your job, or suffering any long term illness.
Because a contingency fund makes sense. But if you save the £500 a month even at today's interest rates you'd end up with the best part of £20,000 in three years.
I hate debt, and once you're free of it you're, well, Tilly at 22:18.
A savings buffer is a good thing to have if you're still employed, just in case the worst comes to the worst and you get laid off / made redundant / become unable to work for whatever reason.
However, if you feel your finances are pretty stable and secure, then paying off the mortgage is definitely the way to go.
One needs enough money on easy access to ensure not needing to borrow at high rate. Once that's covered, get rid of debts starting with the most expensive.