Guru's... what should I do with 50k!?

Gwhiz

anselld wrote: »

3x Lloyds Vantage accounts - £21k @ 4%
( OK, not strictly speaking >4%, but safe)

So still leaving £28K. My point was that we often hear people say there are better places for their cash but cannot give concrete examples (yours is close) so the reality is that paying off your debt makes sense.

poppysarah

If you use the cash to pay off debt then it won't count as capital if you need to claim unemployment benefits..

Top up your ISA too - don't forget about that.
Have some as reserve cash but not more than 10-20k.

anselld

Gwhiz wrote: »

So still leaving £28K. My point was that we often hear people say there are better places for their cash but cannot give concrete examples (yours is close) so the reality is that paying off your debt makes sense.

I would agree pay off the £11,500 in Jan, but OP still needs to find a sfe home for the rest due to the 10% per year limit (till 2012 at least)

noodle

anselld wrote: »

I would agree pay off the £11,500 in Jan, but OP still needs to find a sfe home for the rest due to the 10% per year limit (till 2012 at least)

i would presume that the 10% limit only applies to 'penalty free' overpayments. it may be possible to pay more, but with penalties.

i am paying more off my mortgage than the 10% i'm allowed, and suffering some charges. however, the 'payback' on those charges is only a few months (in terms of interest saved) and so relative to the paltry savings rates on offer i'm still better off. my penalties reduce each month (as they are based on the unexpired term of my fixed rate) so this works. if penalties are fixed then the maths might not work.

it's a fun excel project to make a model to show what the true cost/benefit of an over-overpayment is, taking into account whatever savings rates are on offer as an alternative. if the mortgage rate is 'high' (mine is 5.7%, which is high relative to many these days) then penalty fees can be well worth it.

botchjob

coke and hookers

barron83

Thanks for all your responses on this! I'm still trying to work this one out.

I called A&L yesterday (my mortage is with them) and discussed the mortgage in detail. To recap, it looks as follows:

- Outstanding balance approx: £115,000

- Monthly repayment: £1,200 (this includes overpayments of around £350 each month)

- I can pay 10% of the outstanding balance in Jan '11 & Jan '12.

- Mortgage term of 3.99% expires in April '12.

- I have £50,000 currently in the bank (making monthly interest at 2.5% gross as it's in my mums account. She's retired)

- A&L advised that a 3% penalty kicks if I pay off a lump sum i.e. £50,000. I guess this equates to approx £1,500. Would it be in my interests though???

Grateful for you help people!!

Barron83

getmore4less

Ask if you can shortern the term and what the fee will be and if there is any retriction to making it longer again later.

This will put the monthly payment up so use up the £50k faster.

ericonabike

Nothing better than spending someone else's money, even if only virtually. But the answer has to depend on OP's character, rather than financial wisdom. Spend spend spend or save save save? Persoanlly I'd take stock and see if there was anything I'd always had a yen to do - learn to fly, travel the world, breed camels - then do it. Once in a lifetime opportunities don't come along very often...

barron83

Thanks Getmore. What do you mean by "shorten the term"? I''m tied in till April '12 and then it just reverts to the SVR.

mlz1413

I think if you have a repayment mortgage then asking to shorten the term (ie from 25 yrs to 20 yrs) would increase the monthly payment so effectively increasing monthly payments without penalty.

Do you have any savings already? If not I would agree with poppysarah and say top up your ISA now and again in April and pay off what you can from your mortgage.

Remember that BOE base rate will not always be 0.5% and as that increases so will mortgage and savings rates.

I'm in the pay off mortgage camp, defo against B2L esp. studio/1 beds there are already lots of these for rent and they have the highest turnover of tenants.