What to do with savings?

gillykms

I'm starting to think I've made a few bad decisions regarding my financial future so any advice would be appreciated.

I bought my house in Oct 2009 at a cost of £110k with a 25% (£27,500k) deposit courtesy of releasing equity from my parents home. This loan has a 6% interest rate. My parents house is currently valued at £100k & I will be entitled to 1/3 of it in the future.

In Oct 2011 my 2yr fixed rate deal was up and my mortgage broker tried to find me a new deal however my house was then valued at £90,500 with £81,500 remaining on the mortgage - no better deals were available and so I am now on a SVR of 4.99% which makes my monthly payment of £450.

I currently have £6k savings & I think I could make that £10k by Jan 2013. This is currently in a 4% interest savings account.

I will be looking for a new job at the end of the year which means moving away and having to rent out my house (which has just been flooded which probably makes it highly undesirable to rent which is a new added stressful thought I am having).

So what should I do?
-Pay £6k off my mortgage immediately
-Wait 6 months & save the £10k which would probably get me onto a better rate than if I payed the £6k now
-Pay some money into the Equity Release pot seeing as it has a higher interest rate?
-Keep all the savings for the possibility of having to rent my house out & the possibility that I might not find a tenant?
-Another option I haven't thought of?

If I had any sense I wouldn't have released equity from my parents home to buy a house. In fact even if I had saved the money myself I wish I hadn't of bought a house at all but isn't hindsight a wonderful thing!

Alfrescodave

Question is where to start.
If I understand correctly you received £27,500 by releasing equity from your parents house and the loan has a 6% interest rate. You then say that you will be entitled to a 1/3 of the house value(presumably when it is sold) but who receives the other 2/3? your siblings?
Also are you making the assumption that house sale (on parents death?) will generate money but possiblity of care home costs might also need to be considered.

hcb42

The priority would be to sort out the insurance claim!

If you only have £6k savings I would not be using those to pay off anything, you should aim for a savings buffer of at least three to six months for emergencies etc.

How are you paying off the loan from parents?

You could of curse sell, pay everyone, and get saving, renting in the meantime, but that also requires the insurance claim to be sorted. ( and might b e less desirable to purchasers assuming it is river flooding