what to do with spare cash

fizzysweets

hi could do with some advice really on where is the best place to put our spare cash a month. Myself and my husband own a house that we rent out each month for £650 our current mortagae is £450 interest only £100,000. We live in my husbands place of work (a hotel) and have no living expenses ie rent,gas,elec bills. We have currently about £1000 a month spare which we have been putting into our one account mortage and have £10,000 so far. At first we were looking to continue this until we have paid of the mortagae which we calculated should take around 6 years if we are consistant. But am now wondering should we think to buy more property to rent or would our money be better in isa's. thanks in advance

timecharger

that's a hard question. Mortgage free in 6 years sounds pretty appealing to me...

some things to consider:

1) how long your husband plans to work - if it's a long time, and you'll stay in the same 'rent paid' area of work, having no mortgage isn't as beneficial as it would be if you were living there

the reason for this is that there mortgage repayments, on a rental property, are taken off before you pay tax - you only pay tax on rent minus mortgage repayments.

So, if you plan to stay in free accomodation and rent out your house for a long time, once the mortgage is cleared you will be paying tax on the whole of the rent (less expenses)

If you plan to move back into the house soon, it makes no difference if there's a mortgage or not, as there's no tax relief on residential mortgages. It's therefore better for there to be no mortage

I hope that makes some sense

2) the one acct is very flexible, and good - but it's not the cheapest by any means. I changed from it (5.19% if I remember, about 6 months back) to Halifax, at 4.29%. I can repay quite a bit with the halifax, and can also re-borrow what I put in - so it's like the one account, only slightly less flexible, and a LOT cheaper - more than £100pm cheaper. worth thinking about

That's all...hth (hope that helps)