Do We Pay Off The Mortgage With Our £85K

[tgm1974]

Hi folks

We are due to receive £85k lump sum for the sale
of my husbands old house. Currently we have a mortgage on this property for £108k (outstanding).

Which way would you go with this - put the £85k off the current mortgage to reduce it by just over £500 per month or invest in a savings account where we could get approx £180 a month on interest?

If we did put off the mortgage, is there an insurance policy you can pay into in the event of one of us dying were you get a lump sum on "the death of a partner". Sorry to be morbid there!

[Mojo-Jo-Jo]

The mortgage. Every time.
You can live day to day with very little but it's surprising how easy it is to lose your home.

[woofgang]

If it was me I would put it into the mortgage. Its amazing how much less money you can live on if your mortgage payment goes down. Yes there are loads of life assurance policies, I would only say do your homework! You will probably still need something to cover the outstanding mortgage.

[ladyalex]

First pay off all debt is the usual financial advice.
After all, you will never get as good an interest rate on your money as the mortgage provider is charging you.

[boxtops]

Yes, pay off the mortgage! and yes, you can get "life of another" insurance - not sure what it's called these days, but you can ask at your bank or insurance broker.

[craft1948]

Buy a small buy to let property, get income from the rent (at least 7%) and maintain your capital.

[Mojo-Jo-Jo]

Buy a nice one and make it affordable please :)

[tgm1974]

I think if we bought a property then we would get approx £400 a month from it, so just a bit less than what we would save paying mortgage off - plus dont think I could deal with the hassle of being a landlord!!

[craft1948]

Yes but at the end you would still have the amount of your original investment, or more.................

[Gizmonster]

I know that it's always nice to pay off debts, etc, just in case you get into financial difficulties etc, but at the end of the day, wouldn't it depend on what your interest rate is on your mortgage ??
Most mortgages would prob be charging you more than you could get if you put the money into a savings account instead ..... but not all of the time.
We're lucky - out mortgage is 0.75% above base rate, so our mortgage rate is currently 1.25%, so if that was us, we'd be looking to invest it in a high interest account rather than pay the mortgage off, as we'd be hoping to get around 3% in a savings account.

[CoffeeLounge]

Pay off a chunk of your mortgage and buy another property to let. That way you will save on your mortgage and have an investment for the future that will be funded by someone else (a tenant). You will still have all your assets and more in a few years time. You could call a BTL a personal pension plan.

[Hymie]

If you have no other outstanding debts – paying off the mortgage will give the best guaranteed return (even in these times of low mortgage interest rates). However I would strongly recommend you keep enough in reserve to tide you over for a minimum of 6 months, or better still a year, to cover a worst case situation of you loosing your regular income.

My other advice is to spend some of it on life’s luxuries – a holiday or a newer car (but don’t waste it on a brand new car).

[paddywak]

After I was made redundant from BC the first thing I did was pay my mortgage off. it's surprising what you can do when you don't have that bloody great bill round your neck, for instance you can look for jobs you enjoy not the ones that pay the most and as somebody has said earlier if it's paid for you don't have to worry about being repossessed and if the worst comes to the worst you can always re-mortgage.

[Old_Geezer]

Make sure you keep anough saving for a rainy day but any "spare" after that, paying off the mortgage is a good idea for the reasons stated above. Even with a low interest mortgage you'd have to search around to get the same rate of interest on an investment.

[Hopkirk]

Check on any penalties for paying off part of the mortgage.

[Peter Pedant]

Pay off mortgage

No one can make money at a greater interest than the mortgage rate you are paying ergo..

That fellow with the bug eyes Alvin Hall and also money box live all recommend this so it must be true

[Gizmonster]

Peter Pedant - we currently owe approx £25k on our mortgage - the rate on it is 0.75% above base rate, so it's currently 1.25%.
I've got £30k+ in an ISA earning 3.5% at the mo ...... would you recommend that I use the money to pay off my mortgage ????
...... there are exceptions to the rule !!!!

[arwyn]

I say it depends on your age group,.