What to do while waiting to pay mortgage?
Discussion
Mortgage balance 36k, bank currently at 32k, it fluctuates somewhat but typically increases monthly by £1k+
2 years and some months left on current fixed rate. Already overpay each year by the maximum allowed without early repayment charges. Within that time I'm hoping to accumulate some more savings, and then pay off the remaining mortgage balance as soon as the fixed rate ends.
My question is, what to do while waiting to pay it off, as despite being quite careful with money, it somehow always slips my mind to actually open a savings account or invest, so I have the cash just sat there when it could at least be earning interest.
From the little bit that I've read, it looks like I can put £20k per year into a savings account, and if it's an ISA then I wont get charged tax on the interest?
I may be tempted with investing instead, but this appears to be more of a long term thing and I'd prefer something risk free. According to a savings account calculator, if I put 20k in to a savings account (one where I can access the money if needed), it'll make a couple of grand over 2 years. Which to me is better than nothing and should have done it years ago!
2 years and some months left on current fixed rate. Already overpay each year by the maximum allowed without early repayment charges. Within that time I'm hoping to accumulate some more savings, and then pay off the remaining mortgage balance as soon as the fixed rate ends.
My question is, what to do while waiting to pay it off, as despite being quite careful with money, it somehow always slips my mind to actually open a savings account or invest, so I have the cash just sat there when it could at least be earning interest.
From the little bit that I've read, it looks like I can put £20k per year into a savings account, and if it's an ISA then I wont get charged tax on the interest?
I may be tempted with investing instead, but this appears to be more of a long term thing and I'd prefer something risk free. According to a savings account calculator, if I put 20k in to a savings account (one where I can access the money if needed), it'll make a couple of grand over 2 years. Which to me is better than nothing and should have done it years ago!
Apparently not in an ISA though?
It says you can put in up to £20k per year, so I could potentially do 20k straight away and then say another 10k next year, then withdraw when needed.
I've seen a savings account that lets you withdraw as much as you want, but after 3 withdrawals the interest rate drops, I don't intend to withdraw, but like to have the option there if needed.
It says you can put in up to £20k per year, so I could potentially do 20k straight away and then say another 10k next year, then withdraw when needed.
I've seen a savings account that lets you withdraw as much as you want, but after 3 withdrawals the interest rate drops, I don't intend to withdraw, but like to have the option there if needed.
s91 said:
Apparently not in an ISA though?
It says you can put in up to £20k per year, so I could potentially do 20k straight away and then say another 10k next year, then withdraw when needed.
I've seen a savings account that lets you withdraw as much as you want, but after 3 withdrawals the interest rate drops, I don't intend to withdraw, but like to have the option there if needed.
This. ISA interest is tax free - it’s the entire point of them. It says you can put in up to £20k per year, so I could potentially do 20k straight away and then say another 10k next year, then withdraw when needed.
I've seen a savings account that lets you withdraw as much as you want, but after 3 withdrawals the interest rate drops, I don't intend to withdraw, but like to have the option there if needed.
Personally it depends on your appetite to risk.
If it was me, and you really don’t want to risk the capital, I’d put £20k in an ISA now. Then the rest in premium bonds.
With every month buy another £1k premium bonds.
Then at beginning of April next year, draw out £20k from premium bonds and top up ISA.
Unless you want to play the market and invest. Which to be honest over the next couple of years, as you’ve got the money ear marked for something very important. I wouldn’t.
If it was me, and you really don’t want to risk the capital, I’d put £20k in an ISA now. Then the rest in premium bonds.
With every month buy another £1k premium bonds.
Then at beginning of April next year, draw out £20k from premium bonds and top up ISA.
Unless you want to play the market and invest. Which to be honest over the next couple of years, as you’ve got the money ear marked for something very important. I wouldn’t.
You're right I don't really want to risk anything so that sounds like the way to go, ISA and then premium bonds.
I've just had a quick look at premium bonds - it looks to essentially be a way to save your money but instead of interest you just have the potential to win some, but without risk, and you can withdraw at any time - is that correct?
I've just had a quick look at premium bonds - it looks to essentially be a way to save your money but instead of interest you just have the potential to win some, but without risk, and you can withdraw at any time - is that correct?
s91 said:
You're right I don't really want to risk anything so that sounds like the way to go, ISA and then premium bonds.
I've just had a quick look at premium bonds - it looks to essentially be a way to save your money but instead of interest you just have the potential to win some, but without risk, and you can withdraw at any time - is that correct?
Yep, that's how they work, you might win big, you might not win a bean but withdrawing your money is easy.I've just had a quick look at premium bonds - it looks to essentially be a way to save your money but instead of interest you just have the potential to win some, but without risk, and you can withdraw at any time - is that correct?
A few years back I needed to park some funds for a year so maxxed out on premium bonds and I won exactly the same amount over the year as I would've earned in interest but the winnings were tax free.
I'm not overly worried about credit rating as I don't tend to buy anything on finance anyway, unless there's any other good reason for it?
Anyhow I've set up a savings account, 20k into that, should have done it years ago as it took all of 5 minutes... what an idiot for not doing it sooner.
Going to sort out premium bonds later, probably put about 5-6k in for now and top it up each month with any wins automatically going back into the account as well.
Anyhow I've set up a savings account, 20k into that, should have done it years ago as it took all of 5 minutes... what an idiot for not doing it sooner.
Going to sort out premium bonds later, probably put about 5-6k in for now and top it up each month with any wins automatically going back into the account as well.
joestifff said:
Personally it depends on your appetite to risk.
If it was me, and you really don’t want to risk the capital, I’d put £20k in an ISA now. Then the rest in premium bonds.
With every month buy another £1k premium bonds.
Then at beginning of April next year, draw out £20k from premium bonds and top up ISA.
Unless you want to play the market and invest. Which to be honest over the next couple of years, as you’ve got the money ear marked for something very important. I wouldn’t.
This is an excellent way to place your funds, security with both investments and the chance of a win with PB's.If it was me, and you really don’t want to risk the capital, I’d put £20k in an ISA now. Then the rest in premium bonds.
With every month buy another £1k premium bonds.
Then at beginning of April next year, draw out £20k from premium bonds and top up ISA.
Unless you want to play the market and invest. Which to be honest over the next couple of years, as you’ve got the money ear marked for something very important. I wouldn’t.
Stocks and shares ISA would work, Interactive Investor have just launched a managed S/S ISA, you bung them your £20k and they do the legwork for you, do check the fees, though and compare to other offerings.
s91 said:
overpay each year by the maximum allowed without early repayment charges.
This is what I hate about "fixes". Often used to lock you into a mortgage duration and penalties the law would otherwise prohibit.As soon as you can afford to pay off the balance it will probably make sense to do so, despite the penalty. But check the figures carefully before jumping in.
Panamax said:
This is what I hate about "fixes". Often used to lock you into a mortgage duration and penalties the law would otherwise prohibit.
If only there was an alternative you could choose, where the interest rate changed to reflect the prevailing interest rates in the market. You could call it a "variable rate mortgage"... 
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