Owning your own home

Maybe speak to a mortgage adviser and see about offset mortgages? In the current climate, I would probably pay it off, but if you might need the money, paying off a bunch and having the rest as an offset would allow you to use the excess if required.

There’s no formal form or anything.

The agent has a legal obligation to inform buyers of anything that may affect their decision to buy.

If they’ve been shown a surveyor’s report saying a house has subsidence and nothing from an engineer to supersede this then it has to go in the marketing material.

Imagine being a potential buyer who drove 150 miles to a viewing then found out about such a survey.

What @cjr says.

A flexible offset mortgage is the answer. Take out the maximum you can, then put all your money in the account it offsets against. You’ll pay no interest as you’ve effectively paid it off but will be able to draw money out of the account instantly if you need it to buy a £40k kitchen or a 6 litre car.

+1 for pay it off.
Nice "thanks mum" legacy/gift. The psychological benefit of being mortgage free is massive IMO, plus the reduction of (ok its not massive) admin you have to do every time you remortgage, the monthly amount it frees up (which you could put 50% of away and grow savings while feeling like you have loads more money to play with) make it a no brainer for me.
And sorry for your loss.

Is there any reason to not pay it off completely?

You want a Rolex?

Ultimately, is there anything better you can do with the money? If not, pay it off.

If there is something better you could do with the money, the next question is how confident are you in your ability to earn enough to pay off the mortgage when required.

If you invest it, and the investment takes hit because of whatever reason (global recession), the psychological effects of 'squandering' the money would hit pretty hard.

+1 for paying off the mortgage.

FWIW I agree with the above, if it was me I’d just pay it off. @cjr is right about offset mortgages, but realistically if your income is such that you were happily paying the mortgage, you could quickly chunk fairly substantial savings over time anyway, which I expect would also feel pretty fucking good each month once your biggest outgoing (I would imagine) was taken care of.

If you don't have a rainy day fund then keep some back. Especially now it's relaxing to know you fab weather a good storm.

The save 50% idea seems like a good one to me.

Condolences to you and your girlfriend.

Another vote for paying it off.

From a credit risk perspective, paying it off would mean that you were a much safer bet for lenders.

From a credit score perspective, i.e. how much money lenders could make from lending to you, that's a bit more here or there.

Also worth noting that, since 1997, the house price index had gone up by a multiple of 4.5, the FTSE 100 has gone up by 43% (peaking at 49% in 2017), and the FTSE All-Share by 74% (peaking at 175% in 2017).

Of course, you may be a shit-hot active investor, able to pick the top & bottom of the market, and spot unicorns before everyone else. In which case, the crypto markets are waiting, forget the house.

Isn’t the “property vs shares” comparison irrelevant though - as if you have title to the property, you already have the exposure to housing market (regardless of whether you are mortgaged or not)?

I'm not sure I understand, I'm afraid

Just saying that comparing property price increases with shares doesn’t really help with the OP’s choice. If property does well, they get that gain whether they pay the mortgage off or not.

Also worth noting that, since 1997, the house price index had gone up by a multiple of 4.5, the FTSE 100 has gone up by 43% (peaking at 49% in 2017)

Difference isn't so stark if you include dividends (the blue line), although obviously by living in the house you get the imputed rent. You might also say that stock markets have factored in the current macro news whereas house prices lag

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In London theres a few folk saying its just due to it being very dry or hot the last few years and there is loads of movement in the clay beds. Worth getting someone who has good knowledge to take a look. Everyones favourite Rodger Bisby says don't fill in seasonal shift cracks, leave them open if poss (cover from weather if in an exposed location) so that when the ground wets up again house will go back to its former position.

Got you.

When you pay off the mortgage, though, you are freeing up the mortgage payments, which you can then invest.

[Edit]
Ignore this - double counted a column!

Worked example time!

£1000 boomer mortgage that you either pay off now, or pay each year at 5%

Your house increases in value at ~6.85% pa (based on historical growth).

Investments grow at 6.16% (based on historical growth for allshare accumulation index)

You earn, conveniently, the same amount that your mortgage costs. And you either spend that on investments each year, or on your mortgage.

Paying off your mortgage now gives you a combined wealth of 8.8k, versus 5.7k if you invest in a lump and pay your mortgage off over time.

In this example, it's only when you have super low mortgage rates that it's better to invest. With rates of 1.55% and below, you end up with a higher overall worth if you invest everything and leave the mortgage alone.

Edit]
Ignore this - double counted a column!

There's a flip side too, that not being tied to mortgage payments gives you flexibility to re organise your life and work.

It's always going to be that way because of leverage isn't it? UK house prices are paid with a small amount of capital and a lot of debt. Shares are (mostly) bought with a higher proportion of capital. So £X today buys £X of shares, or £10X of house.

That's true but the point I am making is a little different. It's easy to look at the FTSE100 index level and draw the conclusion that UK large caps have been a poor investment over the last 20+ years. On a total return basis it's not so bad.

Personal recourse leverage is a double-edged sword, as some UK BTL investors will find out over the next few years.

You've omitted mortgage amortisation from that calculation. £71 is the principal and interest payment so the 2046 mortgage balance should be zero. Correct figures to compare are £4.2k investments versus £3.98, so better off borrowing to invest.

This makes sense intuitively - obviously you make money if you borrow at 5% and invest at 6.16%. However, a 116 bps spread seems skinny to me when you consider risk and tax.

EDIT: mistake in my reply

By degrees, yes. But if you have a £150k mortgage and you fixed last year at 1% £125 a month in interest might not make any difference to your lifestyle or stress levels. Indeed you might feel more comfortable having £150k in the bank.

The offset mortgage is a catch all.

The monthly bills would be over £500 including the capital repayment, what have I missed?

The £375 bit comes out of the £150k and is still yours, so it’s not a stressor. Or doesn’t if you’re doing interest only.