Borrowed from mortgage for renovation, now have surplus...
Discussion
Long story short, remortgaged the house to take out money to undertake renovation works. 3 stages of renovation scheduled a) ground floor b) 1st floor c) garden.
Weve done renovation a and c, we dont need to do b and thus i have £30k surplus sitting in my cash ISA. I'm managing the monthly mortgage payments ok, not noticing the hit on day to day living.
Question is, do i pay that £30k back into my mortgage to reduce the outstanding balance or do I invest it.
if i was struggling with making my monthly mortgage payment or running short month to month it would be straight back in the bank. Currently my mortgage is running at less than 4% repayment.
Weve done renovation a and c, we dont need to do b and thus i have £30k surplus sitting in my cash ISA. I'm managing the monthly mortgage payments ok, not noticing the hit on day to day living.
Question is, do i pay that £30k back into my mortgage to reduce the outstanding balance or do I invest it.
if i was struggling with making my monthly mortgage payment or running short month to month it would be straight back in the bank. Currently my mortgage is running at less than 4% repayment.
Consigliere said:
Long story short, remortgaged the house to take out money to undertake renovation works. 3 stages of renovation scheduled a) ground floor b) 1st floor c) garden.
Weve done renovation a and c, we dont need to do b and thus i have £30k surplus sitting in my cash ISA. I'm managing the monthly mortgage payments ok, not noticing the hit on day to day living.
Question is, do i pay that £30k back into my mortgage to reduce the outstanding balance or do I invest it.
if i was struggling with making my monthly mortgage payment or running short month to month it would be straight back in the bank. Currently my mortgage is running at less than 4% repayment.
I have a bridge you can buy ...Weve done renovation a and c, we dont need to do b and thus i have £30k surplus sitting in my cash ISA. I'm managing the monthly mortgage payments ok, not noticing the hit on day to day living.
Question is, do i pay that £30k back into my mortgage to reduce the outstanding balance or do I invest it.
if i was struggling with making my monthly mortgage payment or running short month to month it would be straight back in the bank. Currently my mortgage is running at less than 4% repayment.
TX.
Funk said:
Do you get more than 4% on your Cash ISA? If not, the answer's surely to pay off the debt that's incurring more interest than you're making on the savings.
Or you move it to a S&S ISA, stick it in a global ETF and hope it grows. Bit up-and-downy at the moment though.
I do get a smidge above my mortgage interest rate, the other thing is that if we do want to restart the renovation (unlikely but possible) the money is available to hand rather than having to do all the checks and evidences to borrow more.Or you move it to a S&S ISA, stick it in a global ETF and hope it grows. Bit up-and-downy at the moment though.
Simpo Two said:
If you borrowed the money how is the residue of £30K in an ISA? (or has it been hanging over for two FYs?)
Split between partner and Imegaphone said:
If you can afford the current repayments then use it to reduce the term, take some years off the mortgage, if your mortgage allows. Paying off a mortgage early is the best financial decision you can make.
Is it really? from a peace of mind point of view i agree, but best financial decision? hence my questionkeo said:
megaphone said:
If you can afford the current repayments then use it to reduce the term, take some years off the mortgage, if your mortgage allows. Paying off a mortgage early is the best financial decision you can make.
It isn t always the best financial decision you can make. megaphone said:
keo said:
megaphone said:
If you can afford the current repayments then use it to reduce the term, take some years off the mortgage, if your mortgage allows. Paying off a mortgage early is the best financial decision you can make.
It isn t always the best financial decision you can make. It would be impossible to advise OP without knowing how old they are, how long their fix is, how long is left on the mortgage, wider financial circumstances etc.
Personally I borrowed what will probably be a surplus at remortgage. That money is now in a flexible cash variable ISA currently paying 4.6%. The added liquidity also allowed me to lock away my emergency fund into a 5-year fix at 4.5% which matures a couple of months before my fix ends. My mortgage is fixed at 3.97% so although wouldn't have done all of this purely for the fun of it, it is nice that this added liquidity shouldn't cost me money over the fix period.
I do invest in a Stocks & Shares ISA but I use my income for that. The money I have borrowed from the house I am much happier keeping it safe in cash. The reason for that is, when my fix ends in five years, I might want to put a lump back in to hit a particular LTV threshold. If the money is in a lossmaking investment I'm not going to be able to do that. If it is in an investment which has been very successful I am also not going to want to do that.
Personally I borrowed what will probably be a surplus at remortgage. That money is now in a flexible cash variable ISA currently paying 4.6%. The added liquidity also allowed me to lock away my emergency fund into a 5-year fix at 4.5% which matures a couple of months before my fix ends. My mortgage is fixed at 3.97% so although wouldn't have done all of this purely for the fun of it, it is nice that this added liquidity shouldn't cost me money over the fix period.
I do invest in a Stocks & Shares ISA but I use my income for that. The money I have borrowed from the house I am much happier keeping it safe in cash. The reason for that is, when my fix ends in five years, I might want to put a lump back in to hit a particular LTV threshold. If the money is in a lossmaking investment I'm not going to be able to do that. If it is in an investment which has been very successful I am also not going to want to do that.
ATG said:
megaphone said:
keo said:
megaphone said:
If you can afford the current repayments then use it to reduce the term, take some years off the mortgage, if your mortgage allows. Paying off a mortgage early is the best financial decision you can make.
It isn t always the best financial decision you can make. megaphone said:
Of course it depends on individual circumstances, but for the majority of mortgage borrowers, paying it off as early as possible is great financial planning.
may be the conventional wisdom but the average UK mortgage rate over the last 20 years has been ~4.5/5.5% whereas global markets have returned ~9.3% annualised.
king idiot 20 years ago, and I still am.Sport_Turismo_GTS said:
Beetnik said:
may be the conventional wisdom but the average UK mortgage rate over the last 20 years has been ~4.5/5.5% whereas global markets have returned ~9.3% annualised.
Past performance is no guide to the future I'm boring, and don't like taking risks,
With the global stock market being at almost a high, personally putting 30k into it, would be too high a risk.
So, I would either put it all back in the mortgage account or depending on pension position, age and income tax rate, start drip feeding it monthly into my pension. (Reduces risk if there is a stock market fall). Tax relief and compounding will see you in a much better position later. I am early 50s though.
Or take a balanced approach, 10k in S&S ISA, 10k off the mortgage and 10k drip fed into pension. This used to be my strategy with any surplus monthly income - the S&S ISA would then fund more 'fun' stuff.
So, I would either put it all back in the mortgage account or depending on pension position, age and income tax rate, start drip feeding it monthly into my pension. (Reduces risk if there is a stock market fall). Tax relief and compounding will see you in a much better position later. I am early 50s though.
Or take a balanced approach, 10k in S&S ISA, 10k off the mortgage and 10k drip fed into pension. This used to be my strategy with any surplus monthly income - the S&S ISA would then fund more 'fun' stuff.
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