Little chunk of cash- what would you do
Discussion
So my flat is nearly sold. And our new house is getting there.
When we complete in both, after the sdlt, solicitor fees and all the other associated stuff we will receive about 30 as the proceeds of the sale of the flat.
We have about another 40k in cash and will owe 180k on the house (worth about 400).
So what do we do now?
We could:
1. Pay a chunk down on our mortgage, after leaving say 10k for a rainy day we could reduce the mortgage to about 120k. I'm due to refinance the house in June next year- so I could get a good tracker (sub 2pc at the moment) and hammer it as long as rates are low. Could possibly overpay 1500 a month so could clear quite a bit off. Even if we have kids in a couple of years I reckon we could clear the lot in about 5 years.
2. Leave the mortgage where it is and buy a btl flat in london. I've found somewhere suitable for about 200k which would rent for about 1k a month( yes voids service charge etc) but I think a flat like the one I'm looking at will be worth about 250 in 3 to 5 years. Would plan to hold it for the long term tho.
3. Get an offset mortgage - higher rates but lots more flexibility over option 1- is there much point when I get get a cheap tracker though?
My concern is that my wife doesn't have a pension at all. So 2 could act as a pension plan too.
We are both 29.
It's a nice position to be in I appreciate but want to make the right choice.
What would you do?
When we complete in both, after the sdlt, solicitor fees and all the other associated stuff we will receive about 30 as the proceeds of the sale of the flat.
We have about another 40k in cash and will owe 180k on the house (worth about 400).
So what do we do now?
We could:
1. Pay a chunk down on our mortgage, after leaving say 10k for a rainy day we could reduce the mortgage to about 120k. I'm due to refinance the house in June next year- so I could get a good tracker (sub 2pc at the moment) and hammer it as long as rates are low. Could possibly overpay 1500 a month so could clear quite a bit off. Even if we have kids in a couple of years I reckon we could clear the lot in about 5 years.
2. Leave the mortgage where it is and buy a btl flat in london. I've found somewhere suitable for about 200k which would rent for about 1k a month( yes voids service charge etc) but I think a flat like the one I'm looking at will be worth about 250 in 3 to 5 years. Would plan to hold it for the long term tho.
3. Get an offset mortgage - higher rates but lots more flexibility over option 1- is there much point when I get get a cheap tracker though?
My concern is that my wife doesn't have a pension at all. So 2 could act as a pension plan too.
We are both 29.
It's a nice position to be in I appreciate but want to make the right choice.
What would you do?
1 or 3. I'd favour 1.
The London housing market has peaked. I don't think it will fall (at least not significantly) but it isn't going up like it did over the last summer. Election next year and lots of guff about Mansion Taxes mean that the brakes are on things for a few months at least. I'm fairly deeply in London property at the moment, but am not investing in any more places for a while yet (and am advising my clients similarly.)
Oli.
The London housing market has peaked. I don't think it will fall (at least not significantly) but it isn't going up like it did over the last summer. Election next year and lots of guff about Mansion Taxes mean that the brakes are on things for a few months at least. I'm fairly deeply in London property at the moment, but am not investing in any more places for a while yet (and am advising my clients similarly.)
Oli.
I would put it in a SiPP, claim the tax relief then invest in a small business / start up.
Or, if I didn't want to lock the money away until retirement, invest in a small company / start up via EIS, claim the tax relief, then wait until a profitable exit.. Rinse and repeat.
Both of these assume a very healthy attitude to risk and can take a loss in the hope of a very large return. A 29 I was taking these types of risks.. With mixed results.
UV
Or, if I didn't want to lock the money away until retirement, invest in a small company / start up via EIS, claim the tax relief, then wait until a profitable exit.. Rinse and repeat.
Both of these assume a very healthy attitude to risk and can take a loss in the hope of a very large return. A 29 I was taking these types of risks.. With mixed results.
UV
Ultraviolet said:
Or, if I didn't want to lock the money away until retirement, invest in a small company / start up via EIS, claim the tax relief, then wait until a profitable exit.. Rinse and repeat.
Both of these assume a very healthy attitude to risk and can take a loss in the hope of a very large return. A 29 I was taking these types of risks.. With mixed results.
I'd invest £30k in a FTSE100 tracker and take advantage of the big drop the market has seen over the last couple of months.Both of these assume a very healthy attitude to risk and can take a loss in the hope of a very large return. A 29 I was taking these types of risks.. With mixed results.
The other £10k I would invest in start ups - I use Seedrs (see my profile) and have managed to invest in some great businesses.
You are young enough to take some risks and the SEIS/EIS tax and loss relief makes investing in start ups extremely attractive.
PeerIndex is one I've recently invested in - and is still open to investment. Worth a look IMO.
Perch,
Make sure you both have suitable protection in the event of either or both you losing your job, your legs (etc) or your life, especially if you want kids. Get together an emergency fund to see through any rough spots, and then sit down and have a chat with an adviser or someone you properly trust. A financial plan for life evolves over weeks and months, it isn't a race.
I can't be any more boring than that I'm afraid!
Make sure you both have suitable protection in the event of either or both you losing your job, your legs (etc) or your life, especially if you want kids. Get together an emergency fund to see through any rough spots, and then sit down and have a chat with an adviser or someone you properly trust. A financial plan for life evolves over weeks and months, it isn't a race.
I can't be any more boring than that I'm afraid!
that would be a big chunk of mortgages but London property only seems to be going one way as do rents. If I were 200 miles closer and knew London I'd be dipping my toe in that pond. gregf40 said:
I'd invest £30k in a FTSE100 tracker and take advantage of the big drop the market has seen over the last couple of months.
The other £10k I would invest in start ups - I use Seedrs (see my profile) and have managed to invest in some great businesses.
You are young enough to take some risks and the SEIS/EIS tax and loss relief makes investing in start ups extremely attractive.
PeerIndex is one I've recently invested in - and is still open to investment. Worth a look IMO.
Which FTSE tracker offers the lowest expense ratio/fees?The other £10k I would invest in start ups - I use Seedrs (see my profile) and have managed to invest in some great businesses.
You are young enough to take some risks and the SEIS/EIS tax and loss relief makes investing in start ups extremely attractive.
PeerIndex is one I've recently invested in - and is still open to investment. Worth a look IMO.
princeperch said:
Part of me is very attracted to being mortgage free.
Then, like the majority, you may be quite risk averse and the prospect of being mortgage free brings about a sense of safety and well-being.Those who don't care about such things will relish the opposite set of emotions and gamble. Good luck!
I would invest in the fund. Property is a hassle and I think the FTSE will perform better than property over the next 5 years or so. I'd be pretty confident that it will give you more than the mortgage interest would be. If you ignored the money for the next five years it should be worth a bit. I'd do that whilst overpaying the mortgage.
You could always get the mortgage cleared and then invest in riskier stuff afterwards.
You could always get the mortgage cleared and then invest in riskier stuff afterwards.
Gassing Station | Finance | Top of Page | What's New | My Stuff