Build savings or chip away at mortgage

[shaunbhoy]

I bought property in hackney before it became a violent lawless ghetto.

ftfy

[d000hg]

God bothering pikeys!!!

I think everyone in that picture is a god-botherer but none are pikeys, in the picture are predominantly middle class students.


HTH

[sasguru]

Haha- your weak come back shows you to be an afraid little boy.

Whatever. When are you back in London for another back-breaking contract?

[Paddy]

In the past I would always suggest keep the mortgage going because it is cheap money. However, in the last few years the lenders have tried every possible trick to get out of their obligations on my 1.5% mortgage. I am paying off mortgages ASAP. And I am only keeping the minimum amount in the banks. I just don’t trust the f^c£ers any more. Banks think it their right to dip their hands into accounts and just take what they want in charges. Off with their heads.

[aussielong]

Whatever. When are you back in London for another back-breaking contract?

I like hard work.

[aussielong]

ftfy

You obviously don't know Victoria Park. You are going by what you see on TV. Peasant.

[northernladuk]

Thing about offsets is that those nefarious banks always charge you a higher interest rate for the privilege!

They do but if you plan on using it to it's fullest extent it can still be well worth it. Offsetting your personal bank accounts if you are always in the black helps even if it is just a few grand a month. Also using those odd big windfalls you get to offset for just a short term also brings the rate of the overall mortgage down to a level that easily beats a set term one.

Like any financial (dare I say it) product, you have to use it properly for it to work and they know that. Getting an offset and just having a grand in it isn't the point and it won't post the returns you expect.

[northernladuk]

I'd have to run the numbers but my guess is on a mortgage rate of 3.x%, Vs the 2% you can get on an ISA if you need access to the money, paying off would be better, especially since the mortgage payments come down the moment you make the overpayment?

Surely as a contractor that doesn't make total sense, you have to retain savings - one wouldn't stick their warchest as an overpayment (unless you can DEFINITELY get it back out). Or were you specifically meaning long-term savings i.e. not including the warchest?

Holy crap, is that what ISA's are nowadays? Crunching the numbers is the best way but if that is what they are then yes seems a straight decision. I was thinking you might be able to find something that was a whole percentage point more or something. Seems not.

Yes it will come down, just make sure you are on daily interest. Someone else posted an interesting problem about the mortgage not being paid off as they expected it due to the difference between monthly or daily accrual or something even though interest was daily. Can't remember the details but it was quite surprising.

[DimPrawn]

Paying off your mortgage isn't very exciting, but as has already been mentioned, it is equivalent to a zero risk 5 - 7% return on your money by doing so.

Everyone's situation is different, but clearing your debts whilst you are earning and the interest costs are low means a big saving in total borrowing costs in the long term.

Who knows what your earning potential, health and borrowing costs will be in 5, 10 or 15 years time?

[aussielong]

Paying off your mortgage isn't very exciting, but as has already been mentioned, it is equivalent to a zero risk 5 - 7% return on your money by doing so.

Everyone's situation is different, but clearing your debts whilst you are earning and the interest costs are low means a big saving in total borrowing costs in the long term.

Who knows what your earning potential, health and borrowing costs will be in 5, 10 or 15 years time?

It depends on how much capital you have. If I was in the UK now and I could get 1% I'd be borrowing, lev up... Knowing I could cover the risk. Paying off mortgages is for retirement. During a high income working life you want debt. I'm assuming you guys can earn like you say you can.