225k no mortgage or take one to invest more

sotiv

hi all
just sold business where me and my partner endup with a house worth 185k no morgage fully completed. Is it worth getting a morgage out up to the value of the property to invest as it is cheapest way to borrow or is it not a viable idea.Plus we have 225k liquid capital to invest. we shall have plenty of time to play around regarding savings or would property investment be better in some form, we have been looking at overseas property for sometime. we never been in this position before so please take it easy on us. plus is there a way to put aside and save money for our two children for education they are two and seven or should we wait as we have at least 30 years before retirement, we will have 12k a year to pay bread and butter. is ifa the only solution or can we do it bit by bit ourselves. thank you kindly

Cannon_Fodder

With rates on the way up I would not go down the Mortgage route myself. Especially as you sound unsure of what to do with the £225K...if you're having trouble getting your heads round that, what would it be like to find investments totalling £410K ?

Maybe spend a year or two getting the £225K into place, make sure you are happy and comfortable with the way that has gone, before making further commitments. As you say, you have 30 years until retirement, so taking a couple to plan it out won't hurt your long-term potential, too much.

First thing to do is put £3K each into a Cash ISA. Another £3K each in April. That's the easy bit. You can get 5.8% at NS&I at the moment...

Then £4k each into an Equity ISA. Again, another £4K each in April. If you know nothing about investment, maybe an IFA for risk profiling and allocation of appropriate funds would be a good idea, especially as you still have £200K to find a home for, that can be in the same funds outside the ISAs if you want.

ISAs are commonly recommended as more flexible than pensions. This can be useful, but is perhaps in itself a risk. You might consider starting a pension to lock some of the funds away from temptation. Depends on your salaries what you can put in each year. Maybe drip feed from the gains of your normal Equity holdings into the pension in coming years, until you are 50/50 between ISA/Pension for a balance between temptation and flexibility.

Some people think property has peaked. They may be right, but will it dip and if so my how much. Crystal ball, time. Rather than buy direct property, you could include a Property fund in your Equity fund spread...no solicitors fees, estate agents, hassle of finding renters etc...

Child Trust Fund, CTF, for the 2 year old. Make monthly/lump deposits, can also be Equity based if you like. Read up here http://www.moneyextra.com/savings/childtrustfunds.html

sotiv

thanks cf for your quick reply definitely yes to take some time out as we worked our butts out and with children. cash isa and equity isa definitely must say not keen on pensions like to play waiting game specially want will happen here after april reg interest rates via house prices etc. come from east europe systems there are still shambles apart from prices of land and properties but stay here for a bit and will look around here or bit off shore. thanks

sotiv

anyone with different suggestions. ta

Shinds

Maybe invest in a rental propertly.

Say if you buy a flat for around £150k (With no mortgage) - If that flat brings in around £600-£700 per month - That will be more than any savings account would pay you in interest on having that £150k in a bank etc...

sotiv

thank you for that do consider get maybe a couple properties with need of small renovations even if the area is in big housing regenaration or wait a bit

dunstonh

Shinds wrote:

Maybe invest in a rental propertly.

Say if you buy a flat for around £150k (With no mortgage) - If that flat brings in around £600-£700 per month - That will be more than any savings account would pay you in interest on having that £150k in a bank etc...

£150k property with income is £700pm, that is taxable at your highest rate. That yield is also only 5.6% gross. Around 4.36% after basic rate tax.

That is pitiful.

sotiv

dont we all want to pay gordon as little as pos.

dunstonh

Inflation has risen and RPI is now 4.4%. So anything paying less than that after tax is losing money.

sotiv

how about ice save for timebeing

sotiv

guys thank to ALL of you for being here just read (still got study Them) mean all the theads apologise not to do my homework got bit excited. will read any querries will let you know as you said will take time off to study this very helpful. one more question is there a ceilling on how many savings accounts is allowed per person (couple)? cheers
ps keep up the good forum