What saving plan is best for me?

CONDOR_2

Hello,

Im a first time poster, Im a married 25 year old male and have just commenced on a 10 year fixed term £135,000 INTEREST ONLY mortgage with standard life with my second house after a £15,000 deposit.

I am employed as a Police Officer and earn 28k, and my wife earns £30k when I got my mortgage I was strapped and Interest only was recommended to me, however, I want to run a savings Policy to effectively act as a long term (25 year) endowment Policy.

I can save at least £200 every month, occasionally more and want a savings plan for 25 years.

What should I do? What savings plan would be suit my needs? If i can get at least 5-6% then that would go to pay off my mortage.

Can you advise.

Sorry, I forgot to mention that my wife and I are serving Police officers and owing to our exceptional pension plans on retirement we both get £110,000 pay out each, £220,000 in total and 2/3rds of our final salary so I was advised to get an Interest only as our retirement commutation will more than cover my mortgage.

Kind regards

Magnus

kingmonkey

I guess you need to decide what is your risk tolerance. Switching to a repayment mortgage would probably be the lowest risk.

CONDOR_2

I am on a interest only mortgage.

I was just wondering what the best long term savings plan for £200 per month was as I effectively want to run a endowment policy alongside my mortgage to pay off the capital at the end of my mortgage term.

Thanks though:j

Aegis

CONDOR wrote: »

I am on a repayment mortgage.

I was just wondering what the best long term savings plan for £200 per month was as I effectively want to run a endowment policy alongside my mortgage to pay off the capital at the end of my mortgage term.

Thanks though:j

If you're looking for a long term strategy to outperform simple overpayments you will probably need to be looking at an investment plan rather than a simple savings one. Savings in general are not going to do much more than match inflation in the long run. If you're looking to drip feed in the long run, then it might be worth doing a little research into managed funds and/or index trackers to see if those interest you. At £200 per month you can simply set up a stocks and shares ISA and use most of your allowance each year.

Of course, this might not suit your risk profile, so as always do your own research to make sure you're happy with what you're looking for. Consider talking to a local IFA if they'll take on the business for £200 per month.

gozomark

I am on a repayment mortgage

£135,000 INTEREST ONLY mortgage

which is it

CONDOR_2

Beg your pardon.

INTEREST ONLY

That wasa typo, I was bottle feeding my daughter with my other arm

Apologies

If you'd like to contribute?

amistupid

Hi Magnus
Have you explored all the products and services offered by the PMAS? I know they used to be very competetive.

CONDOR_2

Hi,

I did have a look and have two bonds for £20 per month for 10 years.

I could always just take out another for £200 for 25 years, I just thought the 'civvy' market might hav better more competitive options, options that either Im not aware of or don't fully understand.

PMAS is a great set up and a great fall back option.

gozomark

are you prepared to accept risk, or do you want 100% guarantee on your capital ?

opinions4u

Short term, get in to a Regular Saver account. Halifax pays 7% and your own bank may have one that pays more.

This is 5.6% net, which I would assume is more than your mortgage rate is going to be from the start of September.

Invest in a Regular Saver for a year = £2400 + interest at the end of it. Then pay that sum off your mortgage at the end of the year and review your options.

In 'normal' markets I'd say set up a standing order to overpay your mortgage by the £200 a month because the net rate on savings accounts is usually lower than the rate you're paying on your mortgage. Occasionally, using your ISA allowances might work, but you have to be on the ball to regularly compare the ISA rate you receive and ensure it is greater than the mortgage rate you are paying.

I would really struggle to advise you to invest in a savings plan to repay your mortgage that you are reliant on for 25 years. Endowments haven't exactly been popular of late, for example!

Simply overpaying your mortgage by £200 a month, and increasing this amount at pay rise time, will almost certainly leave you with a fully repaid mortgage (or very, very near) in 25 years time.

CONDOR_2

Absolutely amazing advice, I have a 'FREESTYLE' mortgage so am supposed to be able to overpay 10% each year with no early repayment charges, that's what I will do, I will set up a standing order and pay off the capital like that.

Thankyou