Pay off debt or reinvest.

[SilverPirate]

I have a 2 year fixed isa maturing in October,i have been looking around and the interest rates are not attractive right now.What i am thinking, is paying a lump some out of the isa, off my mortgage ,as this would be a better return than saving whilst still having some fall back funds,

The options on the overpay are,

1/Reduce the amount of interest i pay.

2/Reduce the amount i owe.

3/Be mortgage free earlier.

Have any of you guys done or are doing this?What tips can you pass on?

[HighlandTiger]

First rule of saving, get rid of all your debt first. Otherwise you'll be paying more in interest on your debt than you will be earning on your savings.

 

As long as you still have your emergency funds, if it was me, I'd be trying to be mortgage free as soon as humanly possible 

[motorbikez]

Pay a lump out of your mortgage, you never know what's round the corner.With your reduced payments you will have more disposable income to buy PMs with if you wish.

 

I'll tell you an amusing story about  a couple of my biking buddies, we were having a cup of tea at Devil's Bridge a few weeks ago, in conversation Paul says to my mate Miles" how much is your mortgage" Miles replies £28", Paul's respone "f--ks sake £28 a month". Miles "No £28 a year I've £100 left on it but its cheaper to leave the deeds with the building society"

 

I'm killing myself laughing, I say don't ask me anything, of course he does and  a tirade of swearing follows when I say I paid mine off 5 years ago.

[Shamatti]

I have a 2 year fixed isa maturing in October,i have been looking around and the interest rates are not attractive right now.What i am thinking, is paying a lump some out of the isa, off my mortgage ,as this would be a better return than saving whilst still having some fall back funds,

The options on the overpay are,

1/Reduce the amount of interest i pay.

2/Reduce the amount i owe.

3/Be mortgage free earlier.

Have any of you guys done or are doing this?What tips can you pass on?

 

 

When I came in to a substantial lump sum about 8 years ago we paid down part of the mortgage. It reduced our interest rates (As we dropped below the magical 50% loan mark) we reduced our monthly outgoings significantly, and we reduced our overall payback to the bank. We also increased our equity in a property which increased in value far faster than the money would have in the bank.

 

These days those saving would have been spent on silver. In those days I wasn't stacking - damn shame! lol Prices were so low back then! lol

 

Never save money these days unless you have a specific purchase in mind. It does not accrue enough interest to make it worth while. You are always better off paying back an expensive loan then saving at a tiny interest rate.

 

Paying off your mortgage enables you to buy more silver with the saved repayments!

 

That's my advice, any way!

[BaldyBob]

Mortgage for me too. Overpay at every opportunity.

I am new to this site, but likewise have been tidying up a few old ISA's and building society accounts which are earning virtually no interest and were just depreciating assets.

My rule has been to put half of any account I have closed into the mortgage. The other half goes into my savings account which is linked to the mortgage and reducing interest payments anyway. (Or on Silver as happened this week )

A few more years and I hope to free. Good luck to you on achieving the same.

[Pete]

Pay lump sum off your mortgage - it will make a big saving longer term.

Now with the new NISA you can put £15,000 into it each tax year.

[motorbikez]

 It feels great like if a kilo coin was put in your pocket magically hahahahaha

 

 

My kilo Dragon proof will be here next week

[garthy]

I have 21 years left on my mortgage and have had the chance to overpay, even though I can afford to I decided not too, the thinking behind it is that the pound in my pocket today will be worth less in the future, why pay now when in 20 years there's a good chance our wages would've doubled or more and made our mortgages more affordable? 

It's just another way of looking at it as I'm sure our government intends trying to inflate its way out of debt, I may be wrong but I intend riding the wave of inflation to my benefit.

[ukstack]

If i could be Mortgage free at any stage of life is the dream for me personally 

 

even if you payed 100k for a house today and in 20 years its worth 80k how can you put a price of having a roof over your head with no debt for 20years priceless :]

 

On the other hand if i put 100k into some sort of investment ie another house to do up or PMs and lost money id be upset 

 

if your living at the mortgage free house dont worry about the money you got in it. just worry about the investments you make like PMs 

[SilverPirate]

Some good reply's guy's, The mortgage people said i can pay up to 10% per year £500 minimum payment as an over pay. 

Edit; above payments are with out penalty's. 

[Pete]

I have 21 years left on my mortgage and have had the chance to overpay, even though I can afford to I decided not too, the thinking behind it is that the pound in my pocket today will be worth less in the future, why pay now when in 20 years there's a good chance our wages would've doubled or more and made our mortgages more affordable? 

It's just another way of looking at it as I'm sure our government intends trying to inflate its way out of debt, I may be wrong but I intend riding the wave of inflation to my benefit.

 

Looks to me if you have never experienced the wrath of serious interest rates.

When I bought my house I was paying 17% ( seventeen percent. )

Everyone knows rates will rise and a few percent on top of a low rate right now might work out at double your current rate so be careful.

Many folks are maxed out on their payments so a small percentage change might have a significant lever effect.

[Keithoil]

I make huge overpayments on my mortgage every month and also pay of lumps sums every few months.

 

I will be paying 7-8k in October.

 

I need to get rid of it ASAP.

 

I say pay it off your mortgage.

[garthy]

Looks to me if you have never experienced the wrath of serious interest rates.

When I bought my house I was paying 17% ( seventeen percent. )

Everyone knows rates will rise and a few percent on top of a low rate right now might work out at double your current rate so be careful.

Many folks are maxed out on their payments so a small percentage change might have a significant lever effect.

 

Yes Pete totally understand what you're saying, I just wanted to give a difference of opinion, an over payment of my mortgage is £1080 more per year, I feel it's more beneficial to me to invest that else where, if interest rates go through the roof it means inflation is also and we all know we have great hedge against inflation.

 

I'm not saying over paying is a bad thing just not right for me as paying off my mortgage 2 years early when I'm in my mid 50's will not have much bearing on my life, I'd rather have that money now, invest and hopefully have the the perfect hedge against my debt, a debt by then that has been inflated away.

 

just my opinion 

[StackemHigh]

I would also recomend paying off the debt especially on the house first unless it's a very small amount. Even a smaller amount now can reduce the size and length of the mortgage.

 

All said it's your money but think carefully where you could be in 5 to 10 years time.

 

What costs more? then pay that first remembering the rates can and will change.

[SilverPirate]

I got made redundant 2 years ago and had to stretch the mortgage years to aged 75 to make the payments affordable on the crap wage i get now so the more i can get it down the quicker i can retire.