100k equity in house. What to do?
Discussion
As title says I've got 100k (roughly) in equity sat in house. Value is 240k/250k. I know with covid times are uncertain but I cant help thinking that that money is not really doing anything for us.
I've thought about renting the house out and moving somewhere else but where we want to move would mean we would struggle to get a mortgage.
Any thoughts on borrowing some more on the mortgage and what i could invest in?
I've thought about renting the house out and moving somewhere else but where we want to move would mean we would struggle to get a mortgage.
Any thoughts on borrowing some more on the mortgage and what i could invest in?
Isnt that basically like having an endowment mortage ? they didnt go so well last time around for many people ....interest rates dont always stay sub 2% and the stock market may not always return enough to pay your interest and pay off the capital....have you got a reliable crystal ball ? 
https://www.thisismoney.co.uk/money/mortgageshome/...
https://www.thisismoney.co.uk/money/mortgageshome/...
The Ops view ...
Low interest rates mean that the debt isn’t costing you very much. So why not do something with the cash.
The counter view.....
Low interest rates mean that your actually getting better vfm for your mortgage payment than if the rates were higher ie less per month is wasted on interest.(whilst they are not going up any time soon who knows what the world will be in 10/15 years
Whilst I’m not saying go put all your savings into your mortgage I certainly wouldn’t be reducing my equity to make a gamble on stocks.
Low interest rates mean that the debt isn’t costing you very much. So why not do something with the cash.
The counter view.....
Low interest rates mean that your actually getting better vfm for your mortgage payment than if the rates were higher ie less per month is wasted on interest.(whilst they are not going up any time soon who knows what the world will be in 10/15 years
Whilst I’m not saying go put all your savings into your mortgage I certainly wouldn’t be reducing my equity to make a gamble on stocks.
It’s a pity the casinos are closed, you could borrow the £100k and gamble it on red or black 50/50 chance you could clear the mortgage.
But on a serious note, your in a better position than most, consider it banked and work through the next couple of years and see what happens uncertain times are ahead.
But on a serious note, your in a better position than most, consider it banked and work through the next couple of years and see what happens uncertain times are ahead.
You will likely find it extremely difficult to release more than 10-20k from the house as many lenders don't like people doing this even with a strong LTV and will ask why you need the money - for renovations they would likely be more amenable, saying you'd like to gamble with it might not go down so well...
I don’t know OP’s personal situation, but what most people do when they feel they can comfortably afford a bigger mortgage is go and buy a bigger or better house.
Your main home doesn’t attract Capital Gains Tax so is more tax efficient than buying another property, as well as often having a lower mortgage rate. Buying a more expensive house does increase your exposure to the risks of house prices falling (or interest rates going up, which is less likely atm), but on the plus side you get a nicer house to live in.
I know many on PH like to pay off mortgage as early as possible, and feel more comfortable having done so. Totally understand that, but personally have always seen mortgage as cheap debt invested in a tax efficient and attractive asset class, and therefore - whilst younger - something to be maximised within the limits of affordability and the ability to pay it off.
Your main home doesn’t attract Capital Gains Tax so is more tax efficient than buying another property, as well as often having a lower mortgage rate. Buying a more expensive house does increase your exposure to the risks of house prices falling (or interest rates going up, which is less likely atm), but on the plus side you get a nicer house to live in.
I know many on PH like to pay off mortgage as early as possible, and feel more comfortable having done so. Totally understand that, but personally have always seen mortgage as cheap debt invested in a tax efficient and attractive asset class, and therefore - whilst younger - something to be maximised within the limits of affordability and the ability to pay it off.
Edited by 67Dino on Friday 7th August 08:43
Release the £100k from your house if you can
Then
Buy this
https://www.autotrader.co.uk/classified/advert/202...
I’d look to negotiate them down to £92,000 which leaves £8000.
Fill car with fuel
Buy some nice clothes
Drive like crazy
Pick up women
Do that for two weeks then review.
What’s the worst that could happen.
Then
Buy this
https://www.autotrader.co.uk/classified/advert/202...
I’d look to negotiate them down to £92,000 which leaves £8000.
Fill car with fuel
Buy some nice clothes
Drive like crazy
Pick up women
Do that for two weeks then review.
What’s the worst that could happen.
Guv10 said:
...I cant help thinking that that money is not really doing anything for us....?
I’d hazard a guess that money is doing something for you, buy having equity in your house you probably get a better rate on the mortgage.I recently learned this is not obvious to everyone after helping a young couple & explaining.
Looking at LTV Is a sensible thing to do, with them increasing their equity by way of a £10k bigger deposit after speaking to parents it saved them about £100/mth interest, which is a decent return on £10k...
I get the temptation - but it would be a gamble for me in todays environment.
I would be more looking at accelerating paying it off rather than releasing equity. We don't actually know how house prices might go for example, so a small 5% dip in house prices (however unlikely) has a compound effect on the captial you think is available on it.
Its all doom and gloom just now, but like others said there is no sure fire way of turning that captial into a decent return. Or if its a sure bet then its fixed interest which wouldnt necessarily return more than the interest you pay on the captial you have released (or a very minimal net return).
I would be more looking at accelerating paying it off rather than releasing equity. We don't actually know how house prices might go for example, so a small 5% dip in house prices (however unlikely) has a compound effect on the captial you think is available on it.
Its all doom and gloom just now, but like others said there is no sure fire way of turning that captial into a decent return. Or if its a sure bet then its fixed interest which wouldnt necessarily return more than the interest you pay on the captial you have released (or a very minimal net return).
To the op
Put the 100k here
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Yolo
What could possibly go wrong
Put the 100k here
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Yolo
What could possibly go wrong
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