Mortgage repayment or Debt clearing or Pension investing?

jdw2000

Hello all,

I am wondering if you could please offer me your advice as to which of the following I would be best off concentrating my financial efforts:

1). I have an Interest Only mortgage of £156,000. £100k of this is on a great tracker rate of 1.25%. But the other 56k is about 4%. Should I be focusing on at least repaying the 56k?

Or

2). I have credit card debt of 7k. Interest free till end of the year, and then I'll switch to more interest free credit. Should I focus on paying this?

Or

3). My work pension scheme matches my contributions up to 10%. should I focus on that?



Obviously, I'd like to do all 3. But I can't really afford to. I'm also consious of the fact I've had a mortgage for 9 years and never paid any of it off...


Thank you very much in advance for any opinions you have.

J.

katsu

We need more info. Do you have any surplus to pay these things currently? Are you only paying the minimum on your CC?

If you post an SOA (see the sticky on the forum for link etc) then people can help you maximise your "spare" cash for debtbusting etc.

Tixy

Just a warning - don't bank on being able to get another 0% deal card when this one runs out, its getting much harder to get 0% deals especially with higher credit limits.

That aside - have you made any plans/provisions for repaying your mortgage capital at all so far? investments/endowments etc?

Do you have any pension in place so far?

Its difficult to say as it really depends on your priorites and how much spare money you have each month to do any or all of these.

Just thinking personally - I wouldn't want to be missing out on an extra 10% income by not putting into a pension, equally I would be worried about not having a repayment mortgage.

Have you worked out what money you have available each month for these plans?

tyllwyd

About the pension - you need to find out more about what is being offered and where the money is invested, and then I'd post on the pensions board for advice on whether this looks like a good option.

jdw2000

katsu wrote: »

We need more info. Do you have any surplus to pay these things currently? Are you only paying the minimum on your CC?

If you post an SOA (see the sticky on the forum for link etc) then people can help you maximise your "spare" cash for debtbusting etc.

Hi and thanks to everyone who has replied. I wanted to wait until I do an SOA before getting back to you. I've not done an SOA before, I hope I have done this correctly:

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1900
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 300
Total monthly income.................... 2200
Monthly Expense Details
Mortgage................................ 288
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 70
Electricity............................. 44
Gas..................................... 44
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 12
Satellite/Cable TV...................... 39
Internet Services....................... 0
Groceries etc. ......................... 350
Clothing................................ 50
Petrol/diesel........................... 30
Road tax................................ 16
Car Insurance........................... 27
Car maintenance (including MOT)......... 14
Car parking............................. 0
Other travel............................ 116
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 12
Contents insurance...................... 7
Life assurance ......................... 0
Other insurance......................... 50
Presents (birthday, christmas etc)...... 15
Haircuts................................ 0
Entertainment........................... 500
Holiday................................. 100
Emergency fund.......................... 0
Total monthly expenses.................. 1824

Assets
Cash.................................... 0
House value (Gross)..................... 190000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 190000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(288)......1.5
Total secured & HP debts...... 0.........-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
(Unnamed debt).................7200......175.......0
Total unsecured debts..........7200......175.......-

Monthly Budget Summary
Total monthly income.................... 2,200
Expenses (including HP & secured debts). 1,824
Available for debt repayments........... 376
Monthly UNsecured debt repayments....... 175
Amount left after debt repayments....... 201
Personal Balance Sheet Summary
Total assets (things you own)........... 190,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -7,200
Net Assets.............................. 182,800
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.



Please note that as well as the above I have a BTL flat. I wil, be selling this flat ASAP (when the market picks up. The details of the flat are:

Mortgage: £123,000
Monthly payments: £509 (Skipton SVR of 4.95%)
Rent acheived: £700
Bought for: £144,000
Currently valued at: £150,000



Thank you very much in advance.

J.

Tixy

Hi jdw

Is this statement of affairs for both you and the other adult? I notice that you only have your income shown? does the other adult not work?

You do seem to show a surplus at the moment, which is great to put towards your plans but I've also suggested a few other things which should mean you could save even more.

jdw2000 wrote: »

Hi and thanks to everyone who has replied. I wanted to wait until I do an SOA before getting back to you. I've not done an SOA before, I hope I have done this correctly:

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1900 is this with no pension taken out? so if you wanted the full employer contrib you would need to pay 10% of this (after 20% tax)?
Partners monthly income after tax....... 0 nothing
Benefits................................ 0
Other income............................ 300 what is this? is this from the BTL?
Total monthly income.................... 2200
Monthly Expense Details
Mortgage................................ 288
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 70
Electricity............................. 44
Gas..................................... 44
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 12
Satellite/Cable TV...................... 39 do you use all you pay for? could you downgrade? if SKY then if you threaten to leave they usually do a deal (such as half price for 6m or 12m)
Internet Services....................... 0
Groceries etc. ......................... 350 this looks really high for 2. Could be easily done for £200 (some on here manage of £60pp). Could you try reducing?
Clothing................................ 50 do you need this much every month?
Petrol/diesel........................... 30 not using much per month, do you really need a car?
Road tax................................ 16
Car Insurance........................... 27 is this the cheapest deal?
Car maintenance (including MOT)......... 14
Car parking............................. 0
Other travel............................ 116 what is this for? is this the cheapest it can be (eg do you buy a season ticket if its cheaper?)
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 12
Contents insurance...................... 7
Life assurance ......................... 0
Other insurance......................... 50 whats this for
Presents (birthday, christmas etc)...... 15
Haircuts................................ 0
Entertainment........................... 500 this is very high. whilst its ok to spend on this if that is what you want to prioritise, most people on here would suggest you cut this right back rather than have an interest only mortgage
Holiday................................. 100
Emergency fund.......................... 0
Total monthly expenses.................. 1824

Assets
Cash.................................... 0
House value (Gross)..................... 190000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 190000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(288)......1.5
Total secured & HP debts...... 0.........-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
(Unnamed debt).................7200......175.......0
Total unsecured debts..........7200......175.......-

Monthly Budget Summary
Total monthly income.................... 2,200
Expenses (including HP & secured debts). 1,824
Available for debt repayments........... 376
Monthly UNsecured debt repayments....... 175
Amount left after debt repayments....... 201
Personal Balance Sheet Summary
Total assets (things you own)........... 190,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -7,200
Net Assets.............................. 182,800
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

Please note that as well as the above I have a BTL flat. I wil, be selling this flat ASAP (when the market picks up. The details of the flat are:

Mortgage: £123,000
Monthly payments: £509 (Skipton SVR of 4.95%)
Rent acheived: £700
Bought for: £144,000
Currently valued at: £150,000
how soon do you hope to sell - if you get a modest profit after tax on this that could pay off a chunk of your credit card.


Thank you very much in advance.

J.

Just a few comments above hope that some may be useful.
I think if you wanted to you could save £500 from the above budget just on groceries and entertainment. That along with the £200 surplus would allow you to start your pension contributions and start mortgage repayments.

Good luck whatever you decide.

jdw2000

So what do others think about this? Mortgage repayment or Debt clearing or Pension investing?


I have also thought about perhaps part-paying my mortgage rather than being on Interest Only.


Any thoughts?