House Sale equity coming, pay off car finance short term?
Discussion
I separated at Christmas and our family home has been sold and I will get 150k ish in a couple of weeks.
I am going into rented before I buy something I regret but probably only for 6 months or maybe 12 until I find something I really like.
All of this money will be pumped back into the house deposit but what do I do with it in the short term?
I have no debts and nothing I need to give to the ex as that is all sorted. The only credit agreement I have is on my M4 (about 40k). Does it make sense to use some of my money that is coming to settle this now as I am likely to sell the car within 12 months and I then avoid the interest on those payments.
I will be downgrading the car anyway, I have had my fun and do 20k a year in it which isn’t ideal.
Should I do this and then sell it and push the money back into the fund rather than having money sitting there and paying interest to Lombard?
Where do I put the other 100k for 6/12 months where I can get at it if I need to ?
I can leave it in my nationwide but it only gets 1%.
Any ideas appreciated.
I am going into rented before I buy something I regret but probably only for 6 months or maybe 12 until I find something I really like.
All of this money will be pumped back into the house deposit but what do I do with it in the short term?
I have no debts and nothing I need to give to the ex as that is all sorted. The only credit agreement I have is on my M4 (about 40k). Does it make sense to use some of my money that is coming to settle this now as I am likely to sell the car within 12 months and I then avoid the interest on those payments.
I will be downgrading the car anyway, I have had my fun and do 20k a year in it which isn’t ideal.
Should I do this and then sell it and push the money back into the fund rather than having money sitting there and paying interest to Lombard?
Where do I put the other 100k for 6/12 months where I can get at it if I need to ?
I can leave it in my nationwide but it only gets 1%.
Any ideas appreciated.
What’s the APR on the M4?
Is there any penalty to paying it off early?
What if you find the dream home in a couple of months but due to clearing the £40k you cannot then borrow + deposit afford it?
What’s the car worth ?
Why not carry on as you are until you do find the right house then make the car change?
What do you think the M4 will lose on he next 12 months?
Does it need tyres or any servicing on he next 12 months? It could be only depreciation you face in the year as you have got all the work done/ parts will last
You could drop £30 (or is it£50k) into premium bonds - risk free to capital you never know
With equity I’m hearing more and more about a bear market and interest rates going up and trade wars that short term could impact the capital you’ve invested.
What about the Santander 1-2-3 account up to £20k and high interest.
What about having lots of regular saver accounts over many banks and you feed in via Sstanding order the max you can pay and it will be a lot more than 1% again risk free.
Is it currently in an ISA? If not £40k can go into it so that 1% you’ll save 20 or 40% on. E interest if you earn more than £1k in interest.
Is there any penalty to paying it off early?
What if you find the dream home in a couple of months but due to clearing the £40k you cannot then borrow + deposit afford it?
What’s the car worth ?
Why not carry on as you are until you do find the right house then make the car change?
What do you think the M4 will lose on he next 12 months?
Does it need tyres or any servicing on he next 12 months? It could be only depreciation you face in the year as you have got all the work done/ parts will last
You could drop £30 (or is it£50k) into premium bonds - risk free to capital you never know
With equity I’m hearing more and more about a bear market and interest rates going up and trade wars that short term could impact the capital you’ve invested.
What about the Santander 1-2-3 account up to £20k and high interest.
What about having lots of regular saver accounts over many banks and you feed in via Sstanding order the max you can pay and it will be a lot more than 1% again risk free.
Is it currently in an ISA? If not £40k can go into it so that 1% you’ll save 20 or 40% on. E interest if you earn more than £1k in interest.
Max out premium bonds and rest into a a savings account.
No point on an isa as you'll be needing access at any point in the future.
Regards paying the car off I suppose it depends on how you choose to offload it. If BMW will take it back or sell to the motor trade it's not going to do anything except save you a bit of interest which if you bought at the right time will probably be pretty negligible.
No point on an isa as you'll be needing access at any point in the future.
Regards paying the car off I suppose it depends on how you choose to offload it. If BMW will take it back or sell to the motor trade it's not going to do anything except save you a bit of interest which if you bought at the right time will probably be pretty negligible.
Sorry to hear about your separation.
Firstly, you cannot put £40k into an ISA (sorry Welshbeef), it is £20k.
Also, the car finance will impact on any future mortgage application, so that may be a consideration.
It is usually wiser to clear off debt rather than put money on deposit, particularly in your circumstances.
If you are paying 5% APR on a £40k car finance loan this is £1k over six months and £2k over twelve.
If you place the other c. £100k on deposit at 1% then this would give you £1k interest over twelve months that would be tax free.
So that adds up to a £3k return over twelve months on c. £150k (2% net) with no risk and an increase in your credit rating.
If you end up with more than this then an instant access cash ISA or premium bonds are also good risk free bets.
Firstly, you cannot put £40k into an ISA (sorry Welshbeef), it is £20k.
Also, the car finance will impact on any future mortgage application, so that may be a consideration.
It is usually wiser to clear off debt rather than put money on deposit, particularly in your circumstances.
If you are paying 5% APR on a £40k car finance loan this is £1k over six months and £2k over twelve.
If you place the other c. £100k on deposit at 1% then this would give you £1k interest over twelve months that would be tax free.
So that adds up to a £3k return over twelve months on c. £150k (2% net) with no risk and an increase in your credit rating.
If you end up with more than this then an instant access cash ISA or premium bonds are also good risk free bets.
Welshbeef said:
What’s the APR on the M4? 5%
Is there any penalty to paying it off early? Couple of months interest I think is normal on a Lombard deal.
What if you find the dream home in a couple of months but due to clearing the £40k you cannot then borrow + deposit afford it? Won’t happen, not looking for a year so I don’t buy the wrong place
What’s the car worth ? Car is worth 40k so not upside down at the moment
Why not carry on as you are until you do find the right house then make the car change? Might do but had my fun and want to save a bunch of money this year so might change it for something decent but half the cost.
What do you think the M4 will lose on he next 12 months? 6-7k maybe a bit more.
Does it need tyres or any servicing on he next 12 months? It could be only depreciation you face in the year as you have got all the work done/ parts will last . Full service and 4 tyres I reckon so 2k ish
You could drop £30 (or is it£50k) into premium bonds - risk free to capital you never know
With equity I’m hearing more and more about a bear market and interest rates going up and trade wars that short term could impact the capital you’ve invested.
What about the Santander 1-2-3 account up to £20k and high interest.
What about having lots of regular saver accounts over many banks and you feed in via Sstanding order the max you can pay and it will be a lot more than 1% again risk free.
Is it currently in an ISA? If not £40k can go into it so that 1% you’ll save 20 or 40% on. E interest if you earn more than £1k in interest.
Thanks Welshbeef, lots of questionsIs there any penalty to paying it off early? Couple of months interest I think is normal on a Lombard deal.
What if you find the dream home in a couple of months but due to clearing the £40k you cannot then borrow + deposit afford it? Won’t happen, not looking for a year so I don’t buy the wrong place
What’s the car worth ? Car is worth 40k so not upside down at the moment
Why not carry on as you are until you do find the right house then make the car change? Might do but had my fun and want to save a bunch of money this year so might change it for something decent but half the cost.
What do you think the M4 will lose on he next 12 months? 6-7k maybe a bit more.
Does it need tyres or any servicing on he next 12 months? It could be only depreciation you face in the year as you have got all the work done/ parts will last . Full service and 4 tyres I reckon so 2k ish
You could drop £30 (or is it£50k) into premium bonds - risk free to capital you never know
With equity I’m hearing more and more about a bear market and interest rates going up and trade wars that short term could impact the capital you’ve invested.
What about the Santander 1-2-3 account up to £20k and high interest.
What about having lots of regular saver accounts over many banks and you feed in via Sstanding order the max you can pay and it will be a lot more than 1% again risk free.
Is it currently in an ISA? If not £40k can go into it so that 1% you’ll save 20 or 40% on. E interest if you earn more than £1k in interest.
Have answered them next to yours, hopefully you can make sense of it.
coljoh148 said:
Max out premium bonds and rest into a a savings account.
No point on an isa as you'll be needing access at any point in the future.
Regards paying the car off I suppose it depends on how you choose to offload it. If BMW will take it back or sell to the motor trade it's not going to do anything except save you a bit of interest which if you bought at the right time will probably be pretty negligible.
thanks, yes premium bonds seem a good bet. I would sell the car myself to private or trade as have connections. It’s more about if I kept it for a year is it best to pay it off or leave on the Lombard contract.No point on an isa as you'll be needing access at any point in the future.
Regards paying the car off I suppose it depends on how you choose to offload it. If BMW will take it back or sell to the motor trade it's not going to do anything except save you a bit of interest which if you bought at the right time will probably be pretty negligible.
JulianPH said:
Sorry to hear about your separation.
Firstly, you cannot put £40k into an ISA (sorry Welshbeef), it is £20k.
Also, the car finance will impact on any future mortgage application, so that may be a consideration.
It is usually wiser to clear off debt rather than put money on deposit, particularly in your circumstances.
If you are paying 5% APR on a £40k car finance loan this is £1k over six months and £2k over twelve.
If you place the other c. £100k on deposit at 1% then this would give you £1k interest over twelve months that would be tax free.
So that adds up to a £3k return over twelve months on c. £150k (2% net) with no risk and an increase in your credit rating.
If you end up with more than this then an instant access cash ISA or premium bonds are also good risk free bets.
thanks Julian. Good advice there cheers.Firstly, you cannot put £40k into an ISA (sorry Welshbeef), it is £20k.
Also, the car finance will impact on any future mortgage application, so that may be a consideration.
It is usually wiser to clear off debt rather than put money on deposit, particularly in your circumstances.
If you are paying 5% APR on a £40k car finance loan this is £1k over six months and £2k over twelve.
If you place the other c. £100k on deposit at 1% then this would give you £1k interest over twelve months that would be tax free.
So that adds up to a £3k return over twelve months on c. £150k (2% net) with no risk and an increase in your credit rating.
If you end up with more than this then an instant access cash ISA or premium bonds are also good risk free bets.
how do you invest 100k at 1% but be tax free if it’s not as ISA, I wasn’t aware of that?
interstellar said:
thanks Julian. Good advice there cheers.
how do you invest 100k at 1% but be tax free if it’s not as ISA, I wasn’t aware of that?
It is part of your tax allowance. You can earn x amount each year before tax via PAYE. You can also earn £1k a year of interest a year without paying tax (less if you are paying tax at the highest rate) just as you can make c. £11k of capital gains every year without paying any tax. how do you invest 100k at 1% but be tax free if it’s not as ISA, I wasn’t aware of that?
JulianPH said:
interstellar said:
thanks Julian. Good advice there cheers.
how do you invest 100k at 1% but be tax free if it’s not as ISA, I wasn’t aware of that?
It is part of your tax allowance. You can earn x amount each year before tax via PAYE. You can also earn £1k a year of interest a year without paying tax (less if you are paying tax at the highest rate) just as you can make c. £11k of capital gains every year without paying any tax. how do you invest 100k at 1% but be tax free if it’s not as ISA, I wasn’t aware of that?
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