should i pay off my mortgage or pay it down

#SHOULD I PAY OFF MY MORTGAGE OR PAY IT DOWN FREE#

For example, if I can save enough so I have 25 per cent equity when I next remortgage next year I will get a better rate. I’ve learned a lot about what works best. It can even allow for big outgoings like holidays. “I use an app called Sprive that looks at my spending and tells me what I can afford to overpay on my mortgage deal. But with Christmas coming up – with the need to buy presents and whatnot – we’ll see if I keep up at that rate.

“My monthly payments are about £961, probably right now I’m overpaying by about £350 a month. He has a 3-year fixed rate deal that will need remortgaging next year. He has been overpaying on his interest-only mortgage since then and currently has about £260,000 left to pay. Raj is single and bought a two-bed, two-bath flat in Borehamwood in 2020 for £330,000. Raj Patel, 32, marketing manager – ‘I’ll be mortgage-free 10 years early’ The calculations assumes the person is a basic-rate taxpayer and sees 5 per cent a year growth on your investments. “It is not advisable for someone to put their pension saving on hold for too long, or you’ll miss out on growth, so you have a far bigger hole to fill with pension contributions, and it ends up costing you more,” said Sarah Coles, a personal finance expert at Hargreaves Lansdown.

#SHOULD I PAY OFF MY MORTGAGE OR PAY IT DOWN FREE#

Those in workplace pension schemes should keep on paying as employers’ contributions – effectively, free money – cannot be made up later. It would work best for those who have, say, ten years left to pay off their home loan, and who have a private pension as well or instead of a workplace one. This is not an approach recommended for everyone, however.

If they did this for two years their pension pot would be worth more than if they consistently paid their mortgage and pension payments, with a surplus of over £2,500 for a basic rate taxpayer or over £15,500 for higher rates. But after five years, having paid off their mortgage, they could then move the money they were using for their mortgage – £1,334 per month in total – into their pension every month. Taking £425 a month that would have gone into their pension pot means their pension savings were £28,215 lower after four years. If they were on a five-year fixed rate deal with an interest rate of 2.5 per cent costing them around £900 a month, if they choose to overpay by £425 a month, they could pay off their entire debt before the end of their five-year fix, according to L&C Mortgages.

Should i pay off my mortgage or pay it down