Pay a chunk off the mortage, invest... or a car?

Pay a chunk off the mortage, invest... or a car?

Author
Discussion

superpippo

182 posts

201 months

Friday 21st November 2014
quotequote all
A Gallardo.

antspants

Original Poster:

2,401 posts

174 months

Friday 21st November 2014
quotequote all
I'm pleased a few people have mentioned doing something nice to enjoy having the money. My wife has already decided she wants to remodel the lounge and dining room, plus she wants to go on holiday for Xmas as this is the first time in 19 years that she's had a decent amount of time off over the festive period.

Strangely I appear to be talking myself out of a chunk of it going on a car, which is weird because it's all I've thought about since my wife suggested I buy a Porsche, I must be getting old and sensible!

I entered some very approximate figures into the Woolwich mortgage offset calculator earlier and it showed me a saving of just over £100 a month if I put £50k in, which seems like bugger all tbh.

BTL is becoming more attractive because a £50-60k flat in the centre of Leicester where I live would probably generate £350 a month.

Napper said:
Regardless...... You're in a nice position by having this conundrum
Thanks for the reminder, think I'm worrying a bit too much at what should be a nice decision to make wink

antspants

Original Poster:

2,401 posts

174 months

Friday 21st November 2014
quotequote all
superpippo said:
A Gallardo.
/end of thread laugh

That would be a trade off between my son thinking I'm just the best dad in the world vs finding somewhere else to live or death!

gaz1234

5,233 posts

218 months

Friday 21st November 2014
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R8 v10

Simpo Two

85,147 posts

264 months

Friday 21st November 2014
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antspants said:
Strangely I appear to be talking myself out of a chunk of it going on a car, which is weird because it's all I've thought about since my wife suggested I buy a Porsche, I must be getting old and sensible!
Simpo's First Law: 'By the time you can afford the car you always wanted, you don't want it any more'.

antspants said:
I entered some very approximate figures into the Woolwich mortgage offset calculator earlier and it showed me a saving of just over £100 a month if I put £50k in, which seems like bugger all tbh.
I make that a 41.7 year payback, which seems odd. But mortgages are more complicated now then when I had one. Must be something to do with 'offset'?

antspants

Original Poster:

2,401 posts

174 months

Friday 21st November 2014
quotequote all
gaz1234 said:
R8 v10
Off to the classifieds... blimey you can as well eek

Right pack it in all of you now redcard I was thinking 25k was too much, now 65k looks reasonable for a car smile

Rollin

6,077 posts

244 months

Friday 21st November 2014
quotequote all
antspants said:
I'm pleased a few people have mentioned doing something nice to enjoy having the money. My wife has already decided she wants to remodel the lounge and dining room, plus she wants to go on holiday for Xmas as this is the first time in 19 years that she's had a decent amount of time off over the festive period.

Strangely I appear to be talking myself out of a chunk of it going on a car, which is weird because it's all I've thought about since my wife suggested I buy a Porsche, I must be getting old and sensible!

I entered some very approximate figures into the Woolwich mortgage offset calculator earlier and it showed me a saving of just over £100 a month if I put £50k in, which seems like bugger all tbh.

BTL is becoming more attractive because a £50-60k flat in the centre of Leicester where I live would probably generate £350 a month.

Napper said:
Regardless...... You're in a nice position by having this conundrum
Thanks for the reminder, think I'm worrying a bit too much at what should be a nice decision to make wink
£350 minus expenses and tax will seem like bugger all too, but with the potential for a lot of hassle too smile

EddieSteadyGo

11,717 posts

202 months

Friday 21st November 2014
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This isn't what you want to hear, but my advice would be to pay off the car loan and use whatever is left to pay down the mortgage.

If you can keep your currently monthly repayments the same going forward, you will see principle sum you owe come tumbling down, which is actually really nice to see.

Once that is cleared down, you can then use the money that you would otherwise have spent on interest payments to buy a really nice car!

towser44

3,472 posts

114 months

Friday 21st November 2014
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If you go down the mortgage route, depending on what mortgage product you have, you may only be able to pay off a set percentage of the outstanding balance before you incur an early repayment charge.

EddieSteadyGo

11,717 posts

202 months

Saturday 22nd November 2014
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yes, you might not be able to pay off a lump sum, but I believe many mortgage products allow you to temporarily change the term to a much shorter period.

So you can pay off the equivalent of the lump sum perhaps say over 12 months, before you revert back to the original monthly payments.

sploosh

822 posts

207 months

Saturday 22nd November 2014
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I'm in a similar ish position. £68k mortgage left and c. £30k sitting around getting no interest on it. It was there for a reason as jobs were looking dodgy, but ok now.

We're going to use some of this to pay down the mortgage to a level where it'll be cleared in less than 10 years without increasing our monthly payments. This will coincide with by oldest child getting to 18 and going to Uni.

Sounds all very grown up, but it'll mean we have the cash to help the kids at a very expensive time of life.


Sharted

2,615 posts

142 months

Saturday 22nd November 2014
quotequote all
I entered some very approximate figures into the Woolwich mortgage offset calculator earlier and it showed me a saving of just over £100 a month if I put £50k in, which seems like bugger all tbh.

You need to change the settings so that the monthly payment stays the same, that way you pay the mortgage off much faster but the cash remains yours for future spending. Try the calculator again maybe?

antspants

Original Poster:

2,401 posts

174 months

Saturday 22nd November 2014
quotequote all
Sharted said:


You need to change the settings so that the monthly payment stays the same, that way you pay the mortgage off much faster but the cash remains yours for future spending. Try the calculator again maybe?
I'll give it another try.

My wife and I came to the conclusion last night that we're going to stay in this house for a minimum of 5 years, so we're going to use some of the money to redecorate and furnish the lounge and dining room, a new kitchen and new bathroom. With a lump sum of cash available it means we can do it all to a far higher standard than we may have previously been able, and turn what is already a nice home into a really lovely one.

I think I've decided a 17k'ish Boxster (or something else for that amount) will bring me just as much driving enjoyment as a 25k 2010 TTRS, ignoring the slightly higher running costs in an excellent example of man maths.

Going to allocate 5k towards a once in a lifetime holiday and save the rest between now and the summer, 10k to a rainy day fund, probably leaving around 20-25k which I'll decide how to invest once I know exactly how much the taxman is taking from the original sum.


hornet

6,333 posts

249 months

Saturday 22nd November 2014
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gregf40 said:
Paying the mortgage off is over rated IMO.

I'd rather have the money earning more elsewhere.
Where though, and at what risk? I can pay down my mortgage now and know I'm getting a risk free "return" of the future interest avoided. Given the current low rates, you could argue the rate is only likely to go up in the future, so avoiding that now makes sense. There's no way I'm going to match (let alone beat) that return on future interest avoided without exposing my cash to a degree of risk. As others have said, pay down a chunk on the mortgage whilst continuing to make the current level of payment, effectively overpaying for no noticeable impact.

Sharted

2,615 posts

142 months

Saturday 22nd November 2014
quotequote all
Sharted said:
I entered some very approximate figures into the Woolwich mortgage offset calculator earlier and it showed me a saving of just over £100 a month if I put £50k in, which seems like bugger all tbh.

You need to change the settings so that the monthly payment stays the same, that way you pay the mortgage off much faster but the cash remains yours for future spending. Try the calculator again maybe?
Actually, thinking about it 2.4% tax free and zero risk (which is what £100pm equates to in very simple terms) is not a bad proposition really. Assume you are a higher rate taxpayer?

TheLordJohn

5,746 posts

145 months

Saturday 22nd November 2014
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Pay off all existing debt, aside from mortgage. Remortgage as much as poss and buy a couple of BTL's.
Rinse and repeat. Say goodbye to 40% tax.

matty g

231 posts

197 months

Saturday 22nd November 2014
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Oop north that would get you the deposits in 3 £100k BTL

VTECMatt

1,168 posts

237 months

Sunday 23rd November 2014
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Pay car loan off, chunk off mortgage, to racing, 1 year off work, VOE smile

trowelhead

1,867 posts

120 months

Tuesday 25th November 2014
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OP - my suggestion is to hold fire for now...

My advice is to download and listen to a podcast called "meaningful money" on the way to work.

Excellent advice direct from an IFA and will give you a good base of knowledge of your options (isas pensions buy to let etc)

You could well set yourself and your family up financially for life if you invest this money smartly.

Take your time and consider your options.

P.S and as for the car, your thinking sounds good. You probably would get just as much fun from a sub 10k boxster / e46 m3 / e39 m5 / 3.0 z4 etc etc etc

Edited by trowelhead on Wednesday 26th November 11:06

mikerons88

239 posts

112 months

Tuesday 25th November 2014
quotequote all
trowelhead said:
OP - my suggestion is to hold fire for now...

My advice is to download and listen to a podcast called "listen money matters" on the way to work.

Excellent advice direct from an IFA and will give you a good base of knowledge of your options (isas pensions buy to let etc)

You could well set yourself and your family up financially for life if you invest this money smartly.

Take your time and consider your options.

P.S and as for the car, your thinking sounds good. You probably would get just as much fun from a sub 10k boxster / e46 m3 / e39 m5 / 3.0 z4 etc etc etc
Which podcast? When I heard for listen money matters I get a channel with 250+ podcasts!!!