Long term plan advice needed please…

MJay

I am a divorced woman in her late 50’s with health issues. I am about to be medically retired and I am fortunate enough to have a good pension scheme. I will receive approximately £13000 pa and a lump sum of approx £42000 but need to make very careful long term plans as my mortgage will run until I am in my mid 70’s (as it stands). I will not receive any state benefits for another three years and failed in a DLA applications last year.

My current outgoings are approximately £870 pm (including £100 pm overpayment on mortgage) which I think will leave me about £130 pm to keep myself and run a car. I will be able to do some (well paid) sessional work (but not too much because of my health) to top up my income. However, this ability is likely to reduce as the years pass. I attempt DIY but generally have to pay for home maintenance so will need to leave a decent “rainy day” fund.

My mortgage has two elements: @ £36000 on 4.99% (with loyalty reduction) and @ £30000 on £6.04% which will not attract the loyalty reduction of 1.05% for another three years. I can overpay up to £5000 pa on the first element without affecting the reduced rate.

Finally, I have the ability to transmute monthly pension to lump sum and visa versa. With so many decisions to make I would probably benefit from the advice of an Independent Financial Advisor but have no idea how to find someone good locally.

My head is all over the show and I would welcome advice / suggestions for all of you in ‘Moneysaving’ land….

dunstonh

With so many decisions to make I would probably benefit from the advice of an Independent Financial Advisor but have no idea how to find someone good locally.

https://www.unbiased.co.uk is the database of all IFAs. you can post code search to show your nearest IFAs. Avoid the ones with 0870, 0845 or numbers which are not local as these tend to be salesforce IFAs. Personal recommendations are ideal but failing that, pick a local smaller firm as these tend to have to rely on quality of service to get business.

You gave an overview of your situation but what is it that you actually want to achieve. I didnt spot a question in your post.

MJay

I want to achieve the best long-term financial security with some instant backup savings and hopefully be able to afford a / some cheap holidays! I suppose my big question is "Do I pay off element one of my mortgage immediately from the lump sum or pay it off over a couple of years?" If I pay off element two of the mortgage (the dearer part), I will have to refund a cashback of £2000+

dunstonh

It depends would be the answer. There is a thread or two currently running in the investment sections about borrowing to invest. You would in effect be doing the same. So you could take a look at that.

Investing could give you a greater return than the amount of interest you pay. Plus utilising ISA allowances could be more important that paying off the mortgage. After all, if you dont use the ISA allowance, you lose it.

You also have to consider a large penalty if you do it.

MJay

Thank you for your suggestions in last post and this. I never thought of the investment board and will take a look. Cheers!

EdInvestor

I would see a mortgage adviser with a view to using part of the lump sum at least to reduce some of the amount owed and/ or the term and cut the outgoings possibly by remortgaging either now or later.

Plenty of helpful chaps on the Mortgage & Endowments board


Are you in a position to take in a lodger to generate tax free extra income?