Depending on your level of financial discipline (mine isn't great) it is often better to pay off your mortgage early than risk wasting the money elsewhere.
I've been regularly paying off my mortgage over the years but I've also wasted loads of money elsewhere (cars is a good example.) My mortgage was > £250'000 back in mid 2017, and 7 years later in 2024, it will be < £100'000. A massive drop when it's not due to be paid off until 2040. Assuming I don't lose my job or have any other major calamity, it should be paid off well before 2030 (mid-2026 would be a great target as I'll be 50 then.)
The thing about having a nest egg, is that, if you're not disciplined it is very tempting to use it for something. Or you simply don't worry about spending money so much because you have a big buffer to fall back on.
I like the idea of having £10k in an ISA (interest free saving) as an emergency buffer. The idea of the emergency buffer is that you should never touch it (or at least it should never go under £10k.)
In some ways, having wasted big in the past, I'm almost at the stage that I don't need to spend big any more. I don't need more cars. And I've got so many lovely toys.
If you can get better interest in a savings account, yes, it does make sense to put money into that savings account and not pay off your mortgage. But, only if you don't get tempted to spend the money in your savings account.
Now as I'm nearing 50, is it possible to have paid off my mortgage by mid to late 2026? Realistically, I think that is a bit too soon, but you never know.
- Mortgage 1 = £28k and renews in October 2025. Currently 5%
- Mortgage 2 = £77k and renews in October 2025. Currently 1.4% interest (will go up in 2025.)
- We can easily get 4 to 5% interest in savings accounts.
- Mortgage 1 pay off £10k in late 2024/early 2025. Don't renew, and pay off the remainder ASAP! That could be gone by 2026!
- Mortgage 2 don't need to pay off big until the interest changes in October 2025, then we renew for say 2 more years until 2027, pay off big. And don't renew in 2027, with the view to paying off in 2028.
