We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide
Mortgage V’s Savings 35k.
mark101
Posts: 142 Forumite
I have 35k in savings vs. a 105K mortgage.
The mortgage term is 19 years & 5.25% this is due to change to 4.5%.
Do I stick the 35k on the mortgage or stick it in the new Cahoots savings account?
Which product would I be better of with? I see no immediate need for the use of the money.
My monthly Salary should be sufficient for bills etc.
Sorry if this question has been asked before.
The mortgage term is 19 years & 5.25% this is due to change to 4.5%.
Do I stick the 35k on the mortgage or stick it in the new Cahoots savings account?
Which product would I be better of with? I see no immediate need for the use of the money.
My monthly Salary should be sufficient for bills etc.
Sorry if this question has been asked before.
0
Comments
-
Assuming you are a basic rate tax payer then you will get 4.4% with cahoot after tax and 4.5% with your mortgage.
Firstly you ought to have some spare cash for emergencies e.g. loose you job.
This would be worth putting £3K in a cash ISA which is tax free and will give you a better rate than Cahoot (if you get a good account).
If your mortgage isn't flexible then you should also put some into Cahoot for instant access. How much is up to you. Rule of thumb is 3 months salary.
The rest you could pay off the mortgage but to be honest the benefit is marginal (4.5% vs 4.4%).
I am assuming that your mortgage is daily interest.
Can you confirm whether it's annual or daily interest?0 -
It’s calculated on a Daily basis. I have a 2003/4 Cash Isa with the Halifax and it’s in the process of being transferred to the Abbey postal Isa. The 35k is currently in the ING direct account.
Oh I'm a high rate tax payer. (sobs)
Wow! Quick response lissyloo.0 -
Paying off the mortgage will generate the greatest saving.
Before committing all of the savings to the mortgage ask yourself
1) will you ever get £35k again?
2) did you ever have a dream that £35 could make come true?
then pinch yourself, come back to earth and pay off the mortgage
0 -
Yes, paying off the mortgage is better if you pay higher rate tax as you will pay 40% on interest from Cahoot or ING.
Make sure you have enough cash available for emergencies but otherwise paying off the mortgage is a good idea.
Another possible use is to put a lump sum into your pension (within the specified limits).
You get 40% tax relief on contributions.
Worth considering but depends really on whether your current arrangements are adequate.
There are limits on how much you can put in within each tax year.0 -
If you are married and your wife is not a taxpayer you would be better off putting it in cahoot under her name. 5.5% interest tax free. But you should consider taking out cash ISAs for each of you -- the opportunity to get money into tax-free investments is usually worth using.
Even if your wife does pay tax, if she is a basic rate taxpayer then it would be to your advantage to put the savings in her name.
Keep enough to be able to buy flowers and take her out from time to time, so she doesn't abscond with your money. ;DI have five stars! This doesn't mean that I know anything about any of the things I post. I could be a raving lunatic, or a brilliant genius, or just some guy on the internet. In fact, I could be all three at the same time.
If anything I say makes sense, then do it. If not, don't. Don't blame me or my stars if you do something stupid because I suggested it. I'm responsible for my own stupidity only. You are responsible for yours.
Why, I don't even have five stars anymore! Aren't you glad you aren't responsible for my stupidity?0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 354.8K Banking & Borrowing
- 254.5K Reduce Debt & Boost Income
- 455.6K Spending & Discounts
- 247.6K Work, Benefits & Business
- 604.6K Mortgages, Homes & Bills
- 178.6K Life & Family
- 262.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.7K Read-Only Boards