Maths Wizard Needed or maybe not

[gregs1959]

Hello, I hope I can make myself clear in what I’m asking help for.

I have just finished paying a mortgage on a property and I am going to use the saved payments of £1,200 month to try and pay off/down, two other property’s that I have on BTL mortgages.

They have approximately 10 years left to run on their existing mortgage.
The outstanding amounts are £110,000 and £130,000. Probably worth around £100,000 each due property around here still not yet fully recovered from the market crash.

Rather than pay the £1,200 off the mortgages I thought invest in my stocks/shares isa and see how it goes over the next 10 years. So far so good.

Now what I am struggling to get my head round ...... so please bear with me on this .....

I have already £100,000 invested in a s/s isa, I have been invested around 12 months now, and have done very well in my opinion. So I am now going to increase my original savings to match the £1,200 above. Now here where I’m having a brain freeze ..... I would like to keep any further gains from my funds as 2 separate amounts in my head if that makes sense.

So roughly on the back of a fag packet how do I do this. If I’ve already got £100,000 in funds and I’m now putting 2 lots of £1,200 a month. What gains would be mine and what gains to reduce the mortgages. Yes I know some will say does it really matter. Well it does to me.

Not sure if I’ve made my self clear only you lads can tell me that.

Thanks anyhow.
Mark

[GliderRider]

£100,000 in stocks & shares ISA for 12 months? Really?

2 x £1200/month = £2400/month £2400 x 12 = £28,800

ISA limit = £20,000

On which planet are you doing/planning to do all this?

Edited by GliderRider on Saturday 14th July 00:29

[timbo999]

Mortgage gain = Total gain - ((100,1000/Total Fund)*Total gain)

I.e. work out the fraction of the total gain relating to the £100,000 original fund and subtract it from the total gain. Assumes all the funds in the ISA grow at the same rate...

But as above, where is this magic ISA please?

[James_B]

Just note on a spreadsheet or in a book what you buy with your new savings. It will be a certain number of shares, or fund units. Note the number you bought, and the date, and these are your “new” pot. Any time you look at the value of your x shares, and y units, you see how much you have made on your new investments.

Alternatively just open a new account for the new investments. You can have multiple, opening a new one each year if you want.

[Eric Mc]

Have you factored in tax liabilities arising on your share dealing?

[gregs1959]

Thanks glider rider.

I didn't say I had made £100,000 i wish ? I said I have invested £100,000 last year and done ok.

[gregs1959]

Lads I am aware there is a limit of £20,000 per annum , the majority I transferred from a cash isa.

Timbo

Now please explain it or show me in simple terms to someone who failed his GCSE 🤢🤢🤢🤢

PS and thanks
Mark.

[DonkeyApple]

Step 1: what’s the opportunity cost of not paying down the debt by £1200 each month versus the projected growth, after taxes of investing £1200 each month in the markets?

Step 2: pay down the property debts by £1200 each month.

[CaptainSlow]

Contact the lender of the £130k mortgage and ask if they have any forbearance offers. You may get them to reduce the loan value by an amount greater than the £1,200 over payments.

[NickCQ]

CaptainSlow said:

Contact the lender of the £130k mortgage and ask if they have any forbearance offers. You may get them to reduce the loan value by an amount greater than the £1,200 over payments.

Yes this is a good point, you have £40k of neg equity - it might be worth investigating voluntary surrender / forbearance.

[tighnamara]

Eric Mc said:

Have you factored in tax liabilities arising on your share dealing?

When did tax liabilities come in play with ISA’s ?
Unless I have read OP post incorrectly he was referring to dealing stocks & shares within an ISA.

[gregs1959]

Captain and Nick

Yes I have a mortgage of £130,000 on a property however it brings in a decent income of nearly £24,000 per annum so not thought about handing it over........

Mark

[CaptainSlow]

gregs1959 said:

Captain and Nick

Yes I have a mortgage of £130,000 on a property however it brings in a decent income of nearly £24,000 per annum so not thought about handing it over........

Mark

We're not suggesting handing it over. What I mean is that the lender will have built in a loan write down into their annual profits. Possibly to a level slightly below the market value of the property..So over £30k. If you were to be in a position to pay off say £12k they may match say £6k. You'll get a free £6k off your loan and they will get £12k back into their profits.

[emicen]

gregs1959 said:

Captain and Nick

Yes I have a mortgage of £130,000 on a property however it brings in a decent income of nearly £24,000 per annum so not thought about handing it over........

Mark

Mortgage of £130k on a property worth £100k due to not fully recovering from the crash yet.

£100k property pulling in £24k annual rent, I’ll take one of those.

[DonkeyApple]

gregs1959 said:

Captain and Nick

Yes I have a mortgage of £130,000 on a property however it brings in a decent income of nearly £24,000 per annum so not thought about handing it over........

Mark

It doesn’t make sense. You have a property yielding 24% and a share portfolio that is yielding 10%. Why do you want to build the share portfolio further when you can earn 2.5x more from your local property market?

[GliderRider]

DonkeyApple said:

gregs1959 said:

Captain and Nick

Yes I have a mortgage of £130,000 on a property however it brings in a decent income of nearly £24,000 per annum so not thought about handing it over........

Mark

It doesn’t make sense. You have a property yielding 24% and a share portfolio that is yielding 10%. Why do you want to build the share portfolio further when you can earn 2.5x more from your local property market?

Isn't the OP suggesting that rather than pay the mortgages off as one would on a repayment mortgage, that he puts the repayment money into a stocks & shares ISA, thus getting the growth on that money so he can keep the balance when he eventually pays the mortgage off? Obviously the interest on the mortgage will need to be paid as an interest-only mortgage in the meantime.

[NickCQ]

gregs1959 said:

Captain and Nick

Yes I have a mortgage of £130,000 on a property however it brings in a decent income of nearly £24,000 per annum so not thought about handing it over........

Mark

That makes sense if you have an interest only mortgage, but any principal you pay down on the 130% LTV one is probably money you won't see back. Yield sounds great though.

[walm]

Knowing the fund / share prices is the easiest way but I would do it differently to James.

Say you have £100k equally split in two funds, one with a price of 500p when you invest the first tranch of 2x £1,200 and the other with a price of 250p.
Then at the end date you look and the 500p is up to 600p and the 250p is up to 500p.
So £50k will have grown to £60k and the other £50k to £100k. Total gain is 60% (£10k+£50k)/£100k.
Ignore the investments you have made.

Otherwise you have to look at the entry price every time you invest, which is clearly more work.