Am I being thick

simm31

Right I must be being stupid or missing something here...


I have huge mortars £172k and 15 years to go. Married, twins and reasonable income.


Just moving to nationwide 5 yr tracker which you can over pay and leave at any time so really flexible!

If I pay in all my bulk savings when we move to Nationwide in May 2011, say £25k and reduce the term to 8 years, we'll be mortage fee in 8 years and I'll be 47....but have no savings!

Wife does work! No pensions....but owning the house is the goal is a large 4 bed and worth ~ £385k and rising

Should I sink all my cash in the house and leave £5k for emergencies etc....

And how will I build a retirement income post paying off the house...

Sorry to sound dim, just perhaps been reading too much in to these posts....

cha97michelle

I would be reluctant to reach 47 with no thought about pensions. The best plan would be to do a bit of overpaying and a bit of saving for the future.

£5k is not a lot really, and you also have to think about replacing big ticket items like cars when the need arrives, and doing up the house as and when required.

Think about what it is you want to achieve is my advice. I am hoping personally that i can be mortgage free in the next 3 years before i hit 35. That is ambitious, but i have it in mind as a stretch target. I don't plan on not doing anything else though.

pawlala

simm31 wrote: »

And how will I build a retirement income post paying off the house...

You could always use your retirement income paying interest to the bank instead?

simm31

pawlala wrote: »

You could always use your retirement income paying interest to the bank instead?

How does that work then?

adwat

It was ironic simm...

Mini_Bear

Hi Simm, are you thinking about downsizing your property in retirement and using the cash to prop up your retirement? either way with no pension provision in your 40s you need to start saving. whether that is paying off the mortgage first then chucking all savings and extra cash from not paying the mortgage into a retirement plan is your choice.
you also need to consider how much longer you are both happy to work for. if its another 20 yrs, then you go save a lot for your retirement. i would perhaps pop along to the retirement board if you have any questions.

edinburgher

If I pay in all my bulk savings when we move to Nationwide in May 2011, say £25k and reduce the term to 8 years, we'll be mortage fee in 8 years and I'll be 47....but have no savings!

True (and you definitely need to look at pensions now if you haven't already), but you'll also remove the single expense from your budget that is almost always the largest. This will make a real difference to the money you'll need in retirement.

Should I sink all my cash in the house and leave £5k for emergencies etc....

Do you spend £500/mth for family expenses? £5000? It doesn't really matter picking an arbitrary figure, keep enough to cushion the blow if you and/or your wife lose your jobs. Try calculating your monthly expenses for the whole family and then keeping 3-6* times that figure.

misscousinitt

I think that you need to strike a balance between being MF, Savings and Pensions.

Probably best to go onto the Pensions Board and see what can be done about a pension.

I would hang onto the savings, but look carefully at your current incomings and outgoings and see what you can overpay on the mortgage rather than have nothing to fall back on.

Once you know how much you could overpay, have a mess around with the overpayment calculators and see how quickly you could pay your mortgage off (without blowing your savings).

Also, have a look into how you can maximise the interest you get on your savings.

I'm sure there will be others along to help.

Good luck.

simm31

Ok, firstly many thanks for so much great informaton from you all.

Perhaps I now need to add a little detail.

Mortage now £172k at 15years with Nationwide tracker and no overpayment penalties and EPC, so this must be a good choice.

I have about £30-£35k in the Bank, savings and ISAs.

Wife will go back to work P/t in 2years once Twins at High school.

Just HAD to buy a can for the wife so have £180 p/m for 40 months going out.

Good income and HIGH commission, example one deal could gross me £20k.

So let's assume I earn around £85k a year.

If I cain the mortage now

£1167 - Regular payment
£10k bulk one off payment
£800 overpayment p/m

The calc's are telling me its all done in 8years.

I'll be 47, still have £20K+ in the Bank and happy to carry on working albeit 3-4 days a week.

So Questions to help me stay sain!

1) This model sounds right for me/wife, I've got a good handling on all our monthly costs (10yrs worth of Excell!!!) We like an expensive annual Holiday £5k and I own my car outright.

2) Planning for the Interest Rate (IR) to double in 4 years is my idea of 'what might' happen and I can still make payments - of course assuming I'm still a high earner.

3) Once Mortage gone of course Twins will need to still be fed/school etc. But If I'm and Wifey working surely without £2k ish going on a mortage that will become retirement income???

4) Where should that money be invested?

5) I read on here strories that make me feel like a failure of people doubling £40k savgins annaul and paying off mortgages in 6 years....HOW????

Am I missing something or planning right in general, I know everyone is different but right now selling and downsizing is not needed, Why sell your buggest assest?

Tell me what you think.

Cheers

Simon

GEEGEE8

Why didn't you buy the wife's car with cash instead of finance?

I think 30-35k in savings is too much and could be used to pay off part of the mortgage, how much to use is up to you and depends on how secure you think things are at the moment.

Pension is a must and you need to work this into your monthly outgoings.

lincoln-potter

Hello Simm,

Personally I am not a huge fan of pensions although you do need to start looking long term for a way of supporting yourself in the years to come.

But having said that I would say you would be financially better off to cut into your mortgage as soon as you can and then start to build your savings back up (will need a firm hand to make sure you don't continue to spend on things needlessly.

Investments come with risks and rewards. The greater the reward the greater the risk and what you need to consider is the "what if". What if you lost that money, if you can't afford to lose it don't risk it. Play it simple and safe i say.

I personally know that I could double my money with stock at work in a year but I want the stability of owning my home outright. Its all about the what if.

I am sure somebody on here will have a link to a retirement calculator to let you know how big a gap you will need to fill