At what age should I pay my mortgage off?
The majority of people aim to pay their mortgage off during their fifties so they can funnel extra money into their pension pot before retirement. This, however, is what would happen in an ideal world, and is subject to external factors such as rising house prices and whether you are shouldering the costs with a partner or family member. These factors mean that first-time buyers are now paying off their mortgage at an average of 65 years of age.
There are options if you’re paying off your mortgages in retirement, such as interest-only mortgages, which allow you to still have some disposable income.
Should I use my savings to pay off my mortgage?
Using a lump sum you’ve saved to pay off your mortgage is a big decision. If you have a healthy amount that isn’t accruing much interest, it may make sense to pay off a mortgage that’s accruing interest.
However, if you’ve locked away your savings into an account with a competitive interest rate, such as a fixed rate bond or notice account, you’re likely to be committed to growing your money long-term.
Ultimately, if you think you’ll eventually end up using your savings to pay off your mortgage anyway, it could be a no-brainer. Paying off your mortgage now will allow you to funnel the money you were spending on mortgage repayments into savings afterwards, allowing you to build up a decent retirement savings pot.
However, you shouldn’t completely wipe out your savings to do this, as experts recommend that you keep between three and six months’ worth of your salary aside as an emergency fund. This emphasises the importance of a balanced approach when deciding whether to pay off your mortgage or save cash.
Should I use my retirement pot to pay off my mortgage?
If you’ve already retired, using your pension to pay off your mortgage may be a good option. This is especially true if you have an outstanding interest-only mortgage with no money to pay off the remaining balance.
If you choose to take this route, it’s essentially the same as using your savings to repay a mortgage. However, it’s incredibly important that you exercise caution and judgement before taking the plunge, as you wouldn’t want to use up too much of your savings and be left without enough money to live on in your retirement years.
