Am I making the most of my money?

[Chicken Chaser]

I've been saving hard to extend our house next year. I currently have around £30k pumped into my mortgage as overpayments (paying around 2.4% on 100k with the overpayments) and the intention is to pull this out and with a further advance, it'll take the mortgage back up around £150k.

It'll be used from next May so expect that to get anything else with such a return would be a risky bet? Should I be looking to sink this into something else long term and just pay the larger mortgage?

I'm fairly sensible at managing money but I'm a novice at investments.

[HootersGsy]

Chicken Chaser said:

I've been saving hard to extend our house next year. I currently have around £30k pumped into my mortgage as overpayments (paying around 2.4% on 100k with the overpayments) and the intention is to pull this out and with a further advance, it'll take the mortgage back up around £150k.

It'll be used from next May so expect that to get anything else with such a return would be a risky bet? Should I be looking to sink this into something else long term and just pay the larger mortgage?

I'm fairly sensible at managing money but I'm a novice at investments.

That's very short term so I certainly wouldn't be looking at equity investments, cash or overpaying your mortgage is about the safest thing you can do.

[Countdown]

Chicken Chaser said:

I've been saving hard to extend our house next year. I currently have around £30k pumped into my mortgage as overpayments (paying around 2.4% on 100k with the overpayments) and the intention is to pull this out and with a further advance, it'll take the mortgage back up around £150k.

It'll be used from next May so expect that to get anything else with such a return would be a risky bet? Should I be looking to sink this into something else long term and just pay the larger mortgage?

I'm fairly sensible at managing money but I'm a novice at investments.

If I read that correctly you're effectively getting a guaranteed 2.4% return, instant access, and zero risk? If that's the case I'd leave it where it is.

[Chicken Chaser]

Countdown said:

If I read that correctly you're effectively getting a guaranteed 2.4% return, instant access, and zero risk? If that's the case I'd leave it where it is.

Yup thats pretty much it. I wasnt so sure if I should be pumping the cash in elsewhere for a longer term investment and instead of paying cash for everything in the build, taking a further advance at around 2.5% for the whole amount.

[carreauchompeur]

Yep, sort the mortgage first- no way I'd be pulling money back from that for either a fairly risky investment or a safe return of 1-2%

[Chicken Chaser]

So would you recommend that going forward beyond the build then? I could keep on paying overpayments rather than investing in something like fiver-a-day.

[supercommuter]

Ideally I would be looking at £70 per month invested into Honda Finance....

All joking aside, mortgage first. Get rid of that weight

[mikeiow]

If you want a 'safe' punt, buy some premium bonds....the returns are pretty awful right now, but it does at least give a small chance of a lucky win!
(but the rest are right - the mortgage is a better bet!)

[Chicken Chaser]

supercommuter said:

Ideally I would be looking at £70 per month invested into Honda Finance....

All joking aside, mortgage first. Get rid of that weight

Haha! Yes, my input on that thread hasnt gone without notice!

[NorthDave]

The only risk I can see is that you overpay on the mortgage and then the mortgage company decide they don't want to give you a further advance - I would imagine there will be some hoops to jump through.

If you had an offset mortgage it would be a great plan but the above would make me slightly nervous!

[mjb1]

NorthDave said:

The only risk I can see is that you overpay on the mortgage and then the mortgage company decide they don't want to give you a further advance - I would imagine there will be some hoops to jump through.

If you had an offset mortgage it would be a great plan but the above would make me slightly nervous!

This would be my only concern as well, what if the lender refuses to advance you any more? How much 'affordability' do you have left in your mortgage? If it's a very recent loan, then you're probably ok, but if you took it out while affordability calculations were less stringent (or if your circumstances change), then they might not be so willing to advance your overpayments back to you. Also, consider any potential fee's that might be involved.

[Chicken Chaser]

We have nearly almost 50% equity at the moment so should be ok to take an additional 20%. Mortgage is well within our means and jobs are stable. It's in there now and whilst I can remove the payments, it might be cheaper for me to get the further advance at a lower rate and leave the cash in the pot.