Should I pay off my mortgage or invest elsewhere?

11 March 2021

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Question by Jon

I’ve currently got a 5 year fixed mortgage, fixed pre Covid.

Obviously interest rates have now dropped so I’m unsure what the best route forward is for me.

I’ve recently inherited a lump sum of cash – should I pay off my mortgage or invest it elsewhere?

Thank you!


Answered by Carrie Garrett

Hi Jon!

This is a bit of a tricky one, there are lots of variables. First of all it depends on your attitude to debt. Are you someone that would like to repay their mortgage asap, or are you happy for it to run it’s term? You also need to consider whether there are any penalties or charges for early repayment, and whether the remaining mortgage (assuming you aren’t repaying the whole amount) would stay on the current fixed rate or would you be able to move to a new rate? Another option you could investigate is the potential for overpayment, although you are on a fixed rate, often you can make modest overpayments without penalty. If you decided to invest it, you could still use these funds in years to come to repay/reduce the mortgage.

If you were to look at investing, this is a great time of year as you can use this years ISA allowance and it’s not too long until the new tax year when you get your new ISA allowance. Long-term investments generally outperform cash, but you need to be aware that they can go down as well as up.

Whichever route you decide, make sure you leave yourself with an adequate emergency fund.

Answered by

Carrie Garrett

Financial Adviser

I'm a busy mum working in an IFA practice where every day is different. I enjoy being able to make a tangible difference in my clients financial future through effective use of cash flow forecasting.