OLTB wrote:Julian wrote:
At that point in my life however I was fixated on paying off my mortgage as quickly as I could. My logic at the time was that when paying something like a 9% interest rate on a mortgage and maybe even higher at times, and with MIRAS not covering most of my mortgage, it was something like a 15% gross return on capital used to pay down the mortgage.
What I didn't factor in was the longer-term view (I was young and wanted instant gratification even from savings). In retrospect perhaps I would have been better to make sure I had fully used my PEP allowances first since I had decades to pay down the mortgage but the PEPs where a buy-it-while-it-lasts opportunity that would have introduced me to the benefits of compounding much earlier (assuming I invested wisely) and would have provided residual benefit every year thereafter.
Oh well. I am where I am, and where I am now is not exactly a bad place, so just a vague "maybe I could have done better" thought. It's all water under the bridge now.
Just reading your response to TJH, this comment stood out for me as I am thinking of upping my mortgage repayments!
As a slight deviation, I turn 50 later this year and really wish to repay my mortgage as soon as possible (from an internal peace of mind position) as currently it runs until I'm 62. However, I also realise that I need to save a lot in order to have a reasonable income in retirement. My mortgage interest rate is fixed and pretty low (1.99%) for the next four years so I have also been wondering if repaying it is such a good idea.
Interesting discussion, but having paid my mortgage off some years ago now I've got to say that I've had the opposite experience.
During my early HYP years, as I was initially building my first income-portfolio and learning the ropes, I had a decision to make to either plough on full-tilt into aggressively investing any spare funds from accumulated dividends and ongoing wages, when spare cash was available, or whether to address a mortgage that still had a relatively substantial sum outstanding on it.
Interest rates weren't dramatically high, and mortgage payments were manageable, but I always had the nagging feeling that I'd get more 'benefit' from paying off my mortgage than I could perhaps ever actually
'quantify' using a calculator...
This has definitely turned out to be the case for me personally, and whilst I had a 'feeling' that the
emotional-benefit to me (never mind any actual, quantifiable
financial benefit...) of being mortgage-free would be something that I'd enjoy, the actual post-pay-off period has been a time where I've experienced far less work-related stress than during my mortgage-payment years, even though during that period I've changed posts a couple of times and would have expected the work-related stress issues to have at least been maintained, or even grown to a certain extent. I certainly do see the two events as being intrinsically linked...
So I think that personally, I'll always take the view that there are many things in this world that can't be
quantified using a pen and paper, and sometimes the longer-term
emotional-benefits of our financial decisions can often actually
outweigh the actual real-life
financial aspects, and I think paying off a main-home mortgage is one of those instances, or at least it certainly has been in my case..
I can see the 'opportunity cost' angle with regards to tax-shelters, of course, and it's difficult to come to any great conclusion with these questions that might fit every one of us, especially given the benign interest-rate environment that we're currently living in, and with little idea regarding the future direction that they might go in, but I just wanted to mention my own experience with this subject, because if I had my time again I would do exactly the same thing and look to remove the mortgage debt as quickly as I could.
This has been a great thread by the way, both to read about other peoples experiences in such diverse areas, and also to contribute to. I certainly think one of the biggest benefits of the
High Yield Strategies Board is that we're not tied to the tighter guidance on
HYP Practical, and I think this thread is testament to that.
Cheers,
Itsallaguess