What to do with our money?

ANNEGEDDES

Hi all

We are after a bit of advice if poss. OH has recently inherited some money (70,000) and after putting it in savings and not getting much back we are debating what to do.

We both work full time, have a morgage (78,000) that we overpay on an extra 200/month and also have a house that we rent out that we pay an interest only morgage on.

We have no other savings to speak of really, and just stuck on the best thing to do to make this money work

Should we, pay off our morgage, then save what we would have put our morgage? invest? savings accounts?

Thanks hope you can help

ANNEGEDDES

OH has not got a pension should that be something for us to think about (aged 28)?
should we see a financial advisor? if so how do we know who is good?

sorry for the questions!

DiggerUK

ANNE,
If your savings rate is less than mortgage then clear the mortgage.
Can never get my head around why people hang on to debts.

At 28 you have plenty of time to sort out retirement monies, don't forget if mortgage is dead, then what you pay out in repayments will instantly change to an 'income' each month.

Best of fortune.

getmore4less

I think you need to start looking at diversifying your investments.

You have 2 properties so you could do more of that.

Equities are the next step to learn about and decide if you want that option as well.
Do you want to self select or use trackers or other funds is part of that learning process.

ISA are a good place for this and can be better than using pension wrappers so read up about that side of things as well.

Are you likely to become a 40% taxpayer then getting the ISA started as soon as possible is worth while.

If employer contributes to a pension then make sure you collect that free money.

Removing debt is another option, one way to hedge the bets and keep the move house option open is to get an offset mortgage, so reduces the mortgage debt until/if you find something better to do with the money.

N1AK

DiggerUK wrote: »

ANNE,
If your savings rate is less than mortgage then clear the mortgage.
Can never get my head around why people hang on to debts.

At 28 you have plenty of time to sort out retirement monies, don't forget if mortgage is dead, then what you pay out in repayments will instantly change to an 'income' each month.

Best of fortune.

Availability of capital, and if the rate of interest is reasonable to minimise risk/need for higher interest loans in future. I think you'd probably considered these as you mention comparing rates in your answer.

I agree with the notion though. Unless you can beat your mortgage interest rate then get the mortgage down. If your mortgage rate is high, it may be worth looking at whether you can get it down by re-mortgaging now that you can offer considerably more equity.

Personally I'd also suggest putting 3+ months joint income into an easy access saving account, and perhaps another £5k in longer term saving account (perhaps one with penalties for access). This gives you reserves to call on if anything happens.

ANNEGEDDES

thanks for the advice this is fab

ANNEGEDDES

abouve
reported

property.advert

In this day and age, paying off your mortgage may not be the smartest thing to do as getting your hands on the cash again may not be that easy. If you are going to look at the BTL as a business, then you have funds to purchase another property. Whatever you do, keep some cash as a reserve for rainy days etc.

edinburgher

Anne,

You mention that you have a BTL property with an interest only mortgage, but also say that you have 'no other savings to speak of'.

As opposed to buying further properties, how do you plan on paying off the capital on the first one you own? Do you have investments in place that you've not mentioned?

If not, you need to look at investing for the eventual need to pay this off.

ANNEGEDDES

we bought it as a repossesion with a btl morg and significant deposit we plan to sell it at some point and sure it will have increased by then