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Should I invest or pay off my mortgage?

If you’re prepared to invest over a longer period, say five years, in investments that provide equity based returns then […]

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The decision to either focus on paying the annual mortgage or invest the money instead depends on a number of factors and your financial goals. Overpaying on your mortgage will save you interest but at current interest rates that saving may be as low as between one and a half and 3 percent on a fixed term mortgage.

Although the saving in interest would almost certainly be more than the interest paid in a savings account it wouldn’t match many of the yields afforded in funds and investment trusts.

If you’re prepared to invest over a longer period, say five years, in investments that provide equity based returns then the amount you get back will likely be higher than the savings in interest on the mortgage. In the same period. And keep in mind if interest rates rise when you move over to a variable rate or it’s time to remortgage then the investment could be used to repay the mortgage further down the line.

If your mortgage is a high percentage of the value of your house reducing it down somewhat can unlock better deals and interest rates. So that’s something you should consider if you’re in that position.

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