Mortgage planning advice
Discussion
Evening all,
Genuine question(s), as such all advice welcome.
Our current situation
Current property is worth c.£480,000, peaked at £500,000 during CV19 but note the house is at its ceiling price. (Extended, new kitchen, boiler, drive, garden etc)
We have £280,000 left to pay and we were exceptionally lucky, no planning(!), that we secured a 5 year 0.96% fixed repayment mortgage until Jan 2027 - Santander.
It would be nice to move in the next few years but I resent putting £100,000 on the mortgage for little gain. Additionally, not knowing what the market will do. So we’ll assume I’ll stay put.
Clearly no one can predict the future but given the volatility in the market of late, what would you do?
- Make achievable overpayment of c.£400 a month. I haven’t done the calculations to see where this would place us.
- Pay the repayments as per schedule noting it is a rather cheap ‘loan’ and use the money for house improvements etc But then I’m paying VAT on any purchases negating many savings.
- Invest money into a private pension.
- Stocks and shares ISA? I have little to no knowledge of this.
- Other suggestions
I understand that everyone’s circumstances are very different so this is neither a ‘look at what I’ve got’, (or haven’t got!) or a gloat, noting that current mortgage issues!
Genuine question(s), as such all advice welcome.
Our current situation
Current property is worth c.£480,000, peaked at £500,000 during CV19 but note the house is at its ceiling price. (Extended, new kitchen, boiler, drive, garden etc)
We have £280,000 left to pay and we were exceptionally lucky, no planning(!), that we secured a 5 year 0.96% fixed repayment mortgage until Jan 2027 - Santander.
It would be nice to move in the next few years but I resent putting £100,000 on the mortgage for little gain. Additionally, not knowing what the market will do. So we’ll assume I’ll stay put.
Clearly no one can predict the future but given the volatility in the market of late, what would you do?
- Make achievable overpayment of c.£400 a month. I haven’t done the calculations to see where this would place us.
- Pay the repayments as per schedule noting it is a rather cheap ‘loan’ and use the money for house improvements etc But then I’m paying VAT on any purchases negating many savings.
- Invest money into a private pension.
- Stocks and shares ISA? I have little to no knowledge of this.
- Other suggestions
I understand that everyone’s circumstances are very different so this is neither a ‘look at what I’ve got’, (or haven’t got!) or a gloat, noting that current mortgage issues!
Depends what pension and other savings you already have.
And where your careers are going.
Paying off the mortgage is a nice thing to do, but equally have control over a fair pot of cash is nice.
Having a cushion is nice if your job disappears.
Having some capital if you want to start your own business is nice.
So my suggestion would be to save aside from the mortgage for now, invest in various things, shares, funds whatever and keep your options open.
The only possible downside is if you pick really bad investments and are forced to cash in at a bad time.
You have to weigh up the risk of that for yourself.
Also, think about the amount you will have outstanding on the mortgage when you need to re-finance it.
How do you expect that to look as an income multiple, given where you expect your career to be, allowing for inflation etc etc?
Will you still be young enough to get a reasonably long repayment term?
I got to late 40s and found my views changing, when you decide you only want to work another 7 years or so, you have to do things differently.
And where your careers are going.
Paying off the mortgage is a nice thing to do, but equally have control over a fair pot of cash is nice.
Having a cushion is nice if your job disappears.
Having some capital if you want to start your own business is nice.
So my suggestion would be to save aside from the mortgage for now, invest in various things, shares, funds whatever and keep your options open.
The only possible downside is if you pick really bad investments and are forced to cash in at a bad time.
You have to weigh up the risk of that for yourself.
Also, think about the amount you will have outstanding on the mortgage when you need to re-finance it.
How do you expect that to look as an income multiple, given where you expect your career to be, allowing for inflation etc etc?
Will you still be young enough to get a reasonably long repayment term?
I got to late 40s and found my views changing, when you decide you only want to work another 7 years or so, you have to do things differently.
Given cash stuck in a building society for a year is currently 4.1% (minus whatever tax you pay), I definitely wouldn't be overpaying my mortgage in your position, and if your house is at a ceiling, beyond any home improvements that you want, I'm not sure I'd be ploughing money into the house either which won't improve its appeal or value.
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