Finaincial advice - How to survive a recession?
Discussion
One for Timmy35, Scotal, Tonks and all the other financial whizzes....
Let's assume that you have a flat (Repayment mortgage fixed at 5.69% for 3 years) costs about £1100 a month to pay back at present.
Thanks to a deceased relative, I have a reasonable amount of cash in savings (enough to pay the mortgage for over a year).
So should I concentrate on paying off the mortgage and having less of a safety net, or should I maintain the safety net incase I lose my job (work in banking, so hardly secure)?
There is also a good chance that I may end up working overseas for a while - this would allow me to sell my car and free up another 15k to put down on the mortgage/add to savings.
So, what should I do - save thousands of £'s of interest, or build up a big security buffer?
I'm asking because I doubt I'm the only one on PH in a similar situation....
Let's assume that you have a flat (Repayment mortgage fixed at 5.69% for 3 years) costs about £1100 a month to pay back at present.
Thanks to a deceased relative, I have a reasonable amount of cash in savings (enough to pay the mortgage for over a year).
So should I concentrate on paying off the mortgage and having less of a safety net, or should I maintain the safety net incase I lose my job (work in banking, so hardly secure)?
There is also a good chance that I may end up working overseas for a while - this would allow me to sell my car and free up another 15k to put down on the mortgage/add to savings.
So, what should I do - save thousands of £'s of interest, or build up a big security buffer?
I'm asking because I doubt I'm the only one on PH in a similar situation....
Personally I'd go with the large buffer option. If you end up having to get an unsecured loan to tide you over an dpay the mortgage if you do loose your job you'll end up paying an even higher rate of interest than you would be saving on the mortgage.
If things get better in a year or two you can always pay a lump off then. This seems to be more about strategy and flexibility than just the numbers chap.
If things get better in a year or two you can always pay a lump off then. This seems to be more about strategy and flexibility than just the numbers chap.
IMHO, and I am no whizz...
1. Fill your ISA.
2. Pay off as much of the mortgage as you can w/o penalties.
3. Keep putting £1,100 a month into the mortgage.
4. The car is the rainy day scenario. If you have to, you can sell it and for the time being is more fun than a high interest savings account.
If you stop paying the mortgage you begin living beyond your means and that is a painful trend to reverse.
1. Fill your ISA.
2. Pay off as much of the mortgage as you can w/o penalties.
3. Keep putting £1,100 a month into the mortgage.
4. The car is the rainy day scenario. If you have to, you can sell it and for the time being is more fun than a high interest savings account.
If you stop paying the mortgage you begin living beyond your means and that is a painful trend to reverse.
I’m a little conservative when it comes to my own capital. I like to use mortgage products that have an offset account. This way, any spare cash can go into it, and reduce your mortgage repayments. But this cash is also available when you need it.
Aside from that, I like to invest overseas when I've built up what I consider sufficient cash in my offset. You can choose any country you like \ are eligible for. The reason for that is to not put all your eggs in one basket.
Aside from that, I like to invest overseas when I've built up what I consider sufficient cash in my offset. You can choose any country you like \ are eligible for. The reason for that is to not put all your eggs in one basket.
Timmy35 said:
Personally I'd go with the large buffer option. If you end up having to get an unsecured loan to tide you over an dpay the mortgage if you do loose your job you'll end up paying an even higher rate of interest than you would be saving on the mortgage.
If things get better in a year or two you can always pay a lump off then. This seems to be more about strategy and flexibility than just the numbers chap.
That's what I was thinking - my career will either move towards promotion next February and a permanent move to HK (no bonus expectation this year!!) or redundancy....If things get better in a year or two you can always pay a lump off then. This seems to be more about strategy and flexibility than just the numbers chap.
What would you say would be a good buffer - is it the usual 3 months salary?
Bing o said:
Timmy35 said:
Personally I'd go with the large buffer option. If you end up having to get an unsecured loan to tide you over an dpay the mortgage if you do loose your job you'll end up paying an even higher rate of interest than you would be saving on the mortgage.
If things get better in a year or two you can always pay a lump off then. This seems to be more about strategy and flexibility than just the numbers chap.
That's what I was thinking - my career will either move towards promotion next February and a permanent move to HK (no bonus expectation this year!!) or redundancy....If things get better in a year or two you can always pay a lump off then. This seems to be more about strategy and flexibility than just the numbers chap.
What would you say would be a good buffer - is it the usual 3 months salary?
I guess it depends when you move to HK, I presume you'll look to let the flat out then? The rental market should be holding up okay given the nmuber of people holding off buying.
When are you off btw....at this rate they'll be more of us in HK & Singapore than London!
walm said:
IMHO, and I am no whizz...
1. Fill your ISA.
2. Pay off as much of the mortgage as you can w/o penalties.
3. Keep putting £1,100 a month into the mortgage.
4. The car is the rainy day scenario. If you have to, you can sell it and for the time being is more fun than a high interest savings account.
If you stop paying the mortgage you begin living beyond your means and that is a painful trend to reverse.
I'd also like to point out that I can afford the mortgage, and have no intention of defaulting 1. Fill your ISA.
2. Pay off as much of the mortgage as you can w/o penalties.
3. Keep putting £1,100 a month into the mortgage.
4. The car is the rainy day scenario. If you have to, you can sell it and for the time being is more fun than a high interest savings account.
If you stop paying the mortgage you begin living beyond your means and that is a painful trend to reverse.
But it is pretty much a 100% mortgage (well, probably more than that now thanks Gordon....) so should I try and reduce that to 80% as soon as possible, or work on the priciple that I'm only going to lose that equity in the short term, so may as well keep it to hand....?
Have you looked at an off-set type mortgage?
Ok, the savings just sit against your mortgage, which will lower the amount you pay on the monthly repayments, but at least you can have easy access to the funds if you need them, which in fairness seems to be your big worry?
(usual caveat applies with regards to any penalties you may incur switching mortgages)
Ok, the savings just sit against your mortgage, which will lower the amount you pay on the monthly repayments, but at least you can have easy access to the funds if you need them, which in fairness seems to be your big worry?
(usual caveat applies with regards to any penalties you may incur switching mortgages)
done a THIS IS NOT FINANCIAL ADVICE. I HAVEN'T DONE A FACTFIND OR CLIENT PROFILE.
Were I in a similar situation I would....... keep the savings liquid to give you flexibility. Sell the car, pay that lump sum off the mortgage, assuming you won't pay a penalty for doing so.
If you do decide to pay all of your savings off the mortgage, think about how you will pay it if there is a problem with employment.
Were I in a similar situation I would....... keep the savings liquid to give you flexibility. Sell the car, pay that lump sum off the mortgage, assuming you won't pay a penalty for doing so.
If you do decide to pay all of your savings off the mortgage, think about how you will pay it if there is a problem with employment.
Timmy35 said:
Bing o said:
Timmy35 said:
Personally I'd go with the large buffer option. If you end up having to get an unsecured loan to tide you over an dpay the mortgage if you do loose your job you'll end up paying an even higher rate of interest than you would be saving on the mortgage.
If things get better in a year or two you can always pay a lump off then. This seems to be more about strategy and flexibility than just the numbers chap.
That's what I was thinking - my career will either move towards promotion next February and a permanent move to HK (no bonus expectation this year!!) or redundancy....If things get better in a year or two you can always pay a lump off then. This seems to be more about strategy and flexibility than just the numbers chap.
What would you say would be a good buffer - is it the usual 3 months salary?
I guess it depends when you move to HK, I presume you'll look to let the flat out then? The rental market should be holding up okay given the nmuber of people holding off buying.
When are you off btw....at this rate they'll be more of us in HK & Singapore than London!
Any permanent move will be next year, but it's dependent on the package and whether they have any budget for me out there.....
Bing o said:
Timmy35 said:
Bing o said:
Timmy35 said:
Personally I'd go with the large buffer option. If you end up having to get an unsecured loan to tide you over an dpay the mortgage if you do loose your job you'll end up paying an even higher rate of interest than you would be saving on the mortgage.
If things get better in a year or two you can always pay a lump off then. This seems to be more about strategy and flexibility than just the numbers chap.
That's what I was thinking - my career will either move towards promotion next February and a permanent move to HK (no bonus expectation this year!!) or redundancy....If things get better in a year or two you can always pay a lump off then. This seems to be more about strategy and flexibility than just the numbers chap.
What would you say would be a good buffer - is it the usual 3 months salary?
I guess it depends when you move to HK, I presume you'll look to let the flat out then? The rental market should be holding up okay given the nmuber of people holding off buying.
When are you off btw....at this rate they'll be more of us in HK & Singapore than London!
Any permanent move will be next year, but it's dependent on the package and whether they have any budget for me out there.....
scotal said:
done a THIS IS NOT FINANCIAL ADVICE. I HAVEN'T DONE A FACTFIND OR CLIENT PROFILE.
Were I in a similar situation I would....... keep the savings liquid to give you flexibility. Sell the car, pay that lump sum off the mortgage, assuming you won't pay a penalty for doing so.
If you do decide to pay all of your savings off the mortgage, think about how you will pay it if there is a problem with employment.
I think you did 6 months ago, but anyway.... Were I in a similar situation I would....... keep the savings liquid to give you flexibility. Sell the car, pay that lump sum off the mortgage, assuming you won't pay a penalty for doing so.
If you do decide to pay all of your savings off the mortgage, think about how you will pay it if there is a problem with employment.
I guess I'm just feeling guilty about having money knocking around and a big mortgage - it's good to have some positive feedback that being cash rich is no bad thing.
Now, Timmy, how are the pork belly futures holding up?
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