What to do with £140k
Discussion
I have around £140k coming from the sale of a renovation project later this month and trying to decide where best to put it
i have around 170k left on my mortgage (4.2%) fixed for another 4.5yrs, plus 30k each on 2 BTL’s, both have steady tenants on repayment mortgages tho swaying towards leaving them run for now (5yr fixed on mid 2%)
I have only a small amount of other savings (around 15k) as most where used for the renovation
Pension wise, it’s not great at all, only just joined the company scheme and have around 50k in the pot, previously I always anticipated more BTL’s being my main source of income into retirement
I’m just gone 40 with 3 young kids all under 10, partner works part time and have a household income of just over 100k before tax (excluding bonuses), both PAYE
I don’t need access as such, equally I’d rather not tie it down for longer than 12 months, and I’m very risk adverse when it comes to investments
Initial thoughts are £50k into premium bonds and £90k into 12month saver @ around 5.5%?
i have around 170k left on my mortgage (4.2%) fixed for another 4.5yrs, plus 30k each on 2 BTL’s, both have steady tenants on repayment mortgages tho swaying towards leaving them run for now (5yr fixed on mid 2%)
I have only a small amount of other savings (around 15k) as most where used for the renovation
Pension wise, it’s not great at all, only just joined the company scheme and have around 50k in the pot, previously I always anticipated more BTL’s being my main source of income into retirement
I’m just gone 40 with 3 young kids all under 10, partner works part time and have a household income of just over 100k before tax (excluding bonuses), both PAYE
I don’t need access as such, equally I’d rather not tie it down for longer than 12 months, and I’m very risk adverse when it comes to investments
Initial thoughts are £50k into premium bonds and £90k into 12month saver @ around 5.5%?
brianb said:
I have around £140k coming from the sale of a renovation project later this month and trying to decide where best to put it
I have around 170k left on my mortgage, plus 30k each on 2 BTL’s
And you need to ask??I have around 170k left on my mortgage, plus 30k each on 2 BTL’s
Those mortgages are being paid out of taxed income so in reality they're costing you a lot more than the headline rates. If you had the same amount of investment in a tax free wrapper you'd be way ahead. And bear in mind that paying down debt always gives you a "risk free" return - a concept which has value in itself.
Alternatively if you think you can reinvest somewhere else for a 10% return, hopefully without too much risk, then knock yourself out.
Boo-urns said:
First and foremost, use your ISA allowance! £20k for you and £20k for the wife.
I'd probably use the rest to pay down the residential mortgage. Assuming you're a higher-rate tax payer, I doubt you'll be better of saving it and paying tax on the savings.
Don't put it in your pension - if you want to increase your contributions, do some from your salary and decrease your tax exposure.
My two cents, anyway...
You can decrease your tax exposure putting any money in your pension, doesn’t have to come directly from your salary. I'd probably use the rest to pay down the residential mortgage. Assuming you're a higher-rate tax payer, I doubt you'll be better of saving it and paying tax on the savings.
Don't put it in your pension - if you want to increase your contributions, do some from your salary and decrease your tax exposure.
My two cents, anyway...
Edited by Boo-urns on Saturday 26th August 18:23
Panamax said:
And you need to ask??
Those mortgages are being paid out of taxed income so in reality they're costing you a lot more than the headline rates. If you had the same amount of investment in a tax free wrapper you'd be way ahead. And bear in mind that paying down debt always gives you a "risk free" return - a concept which has value in itself.
Alternatively if you think you can reinvest somewhere else for a 10% return, hopefully without too much risk, then knock yourself out.
That’s a great point, and something I naively didn’t consider, I’m assuming paying off the mortgage on my primary residence is the way forward?Those mortgages are being paid out of taxed income so in reality they're costing you a lot more than the headline rates. If you had the same amount of investment in a tax free wrapper you'd be way ahead. And bear in mind that paying down debt always gives you a "risk free" return - a concept which has value in itself.
Alternatively if you think you can reinvest somewhere else for a 10% return, hopefully without too much risk, then knock yourself out.
brianb said:
I’m assuming paying off the mortgage on my primary residence is the way forward?
Yes, the general principle is to pay down your most expensive debt first. Just make sure you understand any early exit fees if and where applicable. They're typically attached to a "fix" contract rather than the mortgage itself.brianb said:
I have around £140k coming from the sale of a renovation project later this month and trying to decide where best to put it
i have around 170k left on my mortgage (4.2%) fixed for another 4.5yrs, plus 30k each on 2 BTL’s, both have steady tenants on repayment mortgages tho swaying towards leaving them run for now (5yr fixed on mid 2%)
I have only a small amount of other savings (around 15k) as most where used for the renovation
Pension wise, it’s not great at all, only just joined the company scheme and have around 50k in the pot, previously I always anticipated more BTL’s being my main source of income into retirement
I’m just gone 40 with 3 young kids all under 10, partner works part time and have a household income of just over 100k before tax (excluding bonuses), both PAYE
I don’t need access as such, equally I’d rather not tie it down for longer than 12 months, and I’m very risk adverse when it comes to investments
Initial thoughts are £50k into premium bonds and £90k into 12month saver @ around 5.5%?
Paying down your mortgage is one option and lots are tempted to do it but whether it’s right for you depends on numerous things but you’re fixed at 4.5% for a while yet. i have around 170k left on my mortgage (4.2%) fixed for another 4.5yrs, plus 30k each on 2 BTL’s, both have steady tenants on repayment mortgages tho swaying towards leaving them run for now (5yr fixed on mid 2%)
I have only a small amount of other savings (around 15k) as most where used for the renovation
Pension wise, it’s not great at all, only just joined the company scheme and have around 50k in the pot, previously I always anticipated more BTL’s being my main source of income into retirement
I’m just gone 40 with 3 young kids all under 10, partner works part time and have a household income of just over 100k before tax (excluding bonuses), both PAYE
I don’t need access as such, equally I’d rather not tie it down for longer than 12 months, and I’m very risk adverse when it comes to investments
Initial thoughts are £50k into premium bonds and £90k into 12month saver @ around 5.5%?
It sounds like all already have a good idea of what doing BTL involves so taking the money and buying either 1 or 2 new BTL’s would probably be my choice. As long as you can make the rent pay the mortgage in this high interest environment this is free money. In the long term you’ll be far better off.
Depending on how the last project went, you could invest in another, larger scale renovation project.
Both options would outstrip any interest you save on the mortgage. IMO you should always have cash that is left in an interest account available to invest in a project. Ultimately you can get 4.5% easy access while you figure out what to do with it and then when you have the right project you are ready to go. If you don’t want to pay the tax on the internet that can always go to your pension.
Average return on premium bonds is 4%, so why bother?
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