Repaying your Mortgage

It's complicated!

If you have a mortgage then early repayment is always an option. But you can't spend time worrying about it. Here are some ground rules:-

• If you are not yet using the full amount of your tax-saving opportunities (pensions and ISA) it is most unlikely that repayment is a good idea.
• Your mortgage may have early repayment penalties.
• You may have a fixed rate mortgage that now looks pretty cheap (but just do the maths).
• Cash is king. Repayment may complicate your cash cushion plans.
• As a mortgaged homeowner you are a member of a politically powerful group. The government cannot allow anything too nasty to happen to you (as a group).

All these argue in favour of retaining the mortgage. But it's very dependent on your personal circumstances, and we can't deny it needs some difficult maths. We recommend you take some unconflicted advice if you are inclined to repay.

What next?

That's the last step of the foundation 5-step plan. You have arrived at a set of financial decisions that seem sensible. What you have not done is to peer into the future to see the consequences of those decisions. Nor have you learned how to invest any surplus savings. To do either of those things you must move on, in your own time, to Saving, Investing and Planning.