Should i Pay mortgage off? (advice/opinions please)

antimatterx

PHG wrote: »

That is nonsense and would classify it as a poor financial decision to do so.

The chances of paying off the debt earlier than the term you get is minimal. Very few people overpay but still get the long terms with the idea of overpaying and don't. It then costs them a lot more in interest. The longer your term the more chance you will be hit by financial instability and unexpected costs which accounts for stress, anxiety and uncertainty, particularly the older you get.

Then there is the opportunity cost of paying it off early and putting the payment into a pension, simply enjoying more of life or maybe being able to retire early. Plus most people need some sort of kick/incentive to pay extra, as it is too easy to leave it be and put it off each month.

The difference in a 35 v 25 year payment and ]is approx. 300 a month which is not huge either.

You are looking at everything remaining constant and not factoring what can happen over 35years vs 25 years. Ask someone who paid off their mortgage by 60 instead of 70 and I guarantee you the 60 year old will likely have had 10 years less of stress.

It's not poor financial advice, he's spot on. Take the longest possible term, always.

It will both, allow you to overpay if possible, or have more disposable income to invest and make a greater return than the interest paid on the mortgage.

Sheep_shear

We took a long term (33 years) for our mortgage. We could easily have taken a shorter one but given that this is our first purchase and there were so many unknowns for us cost-wise, I preferred having the option of a lower payment. We're overpaying a bit but it's nice to know that if things turn south, then there's some movement there.

PHG

PHG wrote: »

That is nonsense and would classify it as a poor financial decision to do so.

The chances of paying off the debt earlier than the term you get is minimal. Very few people overpay but still get the long terms with the idea of overpaying and don't. It then costs them a lot more in interest. The longer your term the more chance you will be hit by financial instability and unexpected costs which accounts for stress, anxiety and uncertainty, particularly the older you get.

Then there is the opportunity cost of paying it off early and putting the payment into a pension, simply enjoying more of life or maybe being able to retire early. Plus most people need some sort of kick/incentive to pay extra, as it is too easy to leave it be and put it off each month.

The difference in a 35 v 25 year payment and ]is approx. 300 a month which is not huge either.

You are looking at everything remaining constant and not factoring what can happen over 35years vs 25 years. Ask someone who paid off their mortgage by 60 instead of 70 and I guarantee you the 60 year old will likely have had 10 years less of stress.

You are incorrect, any person giving sound financial advise will tell you to take the longest term possible as it is a very big safety net if needed while you can still overpay. Loads of people over pay also so don't know why you its not common.

Even if you dont overpay having a lower mortgage payment may enable you to be more comfortable in living your life, have more disposable income or save more for the future. Yes the mortgage will cost more over the longer term but it is worth it compared to spending year under pressure to meet a higher monthly repayment and not being able to live a bit too.

Busman Paddy Lasty

Sheep_shear wrote: »

We took a long term (33 years) for our mortgage. We could easily have taken a shorter one but given that this is our first purchase and there were so many unknowns for us cost-wise, I preferred having the option of a lower payment. We're overpaying a bit but it's nice to know that if things turn south, then there's some movement there.

Did the same here. Took 35 year term as a contingency until we got better jobs, I was on a 3 month contract at the time. Secure jobs now and we can afford to pay almost double our basic payment which reduces our term to 16 years. Overpayment can be cancelled at no cost to us should our circumstances change.

To the OP take professional advice from a risk management perspective. That 100k variable mortgage over 30 years has a 76k cost of credit. I would pay that off next Tuesday!

If your optional investment can out perform that 76k cost over 10 years you'll still have paid a lot of interest on a monthly basis over that time. No need to double expose yourself to the market (my opinion) as you are earning share rewards in work.

Good luck, have a nice life. Compound interest and stress are harsh mistresses.