Saving situation opinions please

xylophone

Repay the mortgage as fast as possible. Why would someone with a stressful job want the hassle of BTL?

Make sure you and your wife have made wills and covered guardianship of your child.
Make sure you have insurance written in trust in place to cover repayment in full in the event of your/your wife's death.
Make sure you have permanent health insurance.
Increase the emergency fund.
Would additional payments into your pension be enough to keep the child benefit?

Use tax shelters where available.

Linton

I believe you should go for a repayment mortgage. Theoretically you could be better off saving the equivalent money and investing in shares. However that is a strategy for experienced investors who are happy to accept the risks involved. It seems to me that amassing a large lump sum to pay off your mortgage is not the best place to learn.

The worst thing you can do in my view is to have no concrete ongoing strategy for paying off an interest only mortgage when its term ends which would seem to be the case at the moment. Taking up 2 mortgages if you could get them seems to me to be extremely risky. If something goes wrong that prevents you meeting the ongoing payments you could well lose everything.

Also as others have said you should increase your emergency fund to say 6 months.

kerrjp

Ok so it seems people are overwhelmingly telling me to steer clear of a buy-to-let (well at least for the time being) and to start to pay of my mortgage. I am now wondering if as a half way house I could go for the interest only option for the four years, using the monthly savings to build up our emergency fund and our isa accounts possibly set up a small investment bond for my daughter, then when the fixed period is up we take the best repayment mortgage rate we can get and start eating it knowing that we have some accessible cash behind us. Then if anything was to improve for us (say an inheritance or a lottery win) we could look at adding a buy to let investment to our assets. How does that sound??

oldvicar

It sounds as if you are determined to borrow money on short-term fluctuating rates (your mortgage) to gamble on long term (in your daughter's name) investments.

What, exactly, is the attraction in borrowing money to 'invest' in the stock market?

Unless you are cleverer than everybody else, don't you think we'd all be doing it and making a killing?

atush

You do seem bound and determined as old vicar says. this is pretty unwise.

and you haven't said if paying more into your pension would get you Child benefit?

In any case, at your salary you can afford to invest 25-50 a month for her into an Investment trust.

you currently have no strategy to pay off your mtg, so take the repayment mtg. And start saving harder to pay it off earlier. I would not get into BTL, until your current mtg is paid off, or as said you get an inheritance or win the lottery.

kerrjp

Its not a case of being determined to invest in the stock market at all, the real issue is that if I go for the repayment mortgage then I will have very little left to save a month, and all my savings will be permanently tied up in my home, but on the flip side If i stay interest only then I would be able to save a total of between 6 - 700 a month but with any savings account giving hardly any interest I cant see how I would make this money work for me? I don't plan to live in my home forever and will no doubt need to move at some point in the future and my whole mortgage situation will probably change again within the 25 - 30 year period. I do have some security that all things being equal I will probably inherit enough to pay off my mortgage at some point within the next 25 years.

The buy to let idea has an appeal because if i could start it now then I would at the age of 50 - 55 have a second property paid for that can generate extra passive income to my family and could either be sold or given to my child or future children etc....

Paying more into my pension to enable child benefit would take about a £12,500 salary sacrifice across the year, doing this would lower my take home pay by too much so really isn't an option.

Please understand I respect everyone's view and critique, hence why I am posting here. Many thanks to everyone for the continuing input.

atush

I would stick with repayment, and use the extra cash provided when your spouse gets back to work to provide other savings long term.

If you can't afford to save, with 2 salaries- one well into HRtax, then maybe you overextended yourself on buying the current property. Most people do, but then have to wait a bit before they can build substantial savings.

But you really should have a repayment plan in place so take the repayment mtg.

clear_as_mud

Would any lender even consider giving you another mortgage on your salary? You said yourself you have a large mortgage.
Prehaps other lenders will think that too and decline you. You might appear even more risky as you are only on interest only and not paying anything back yet, with no current repayment vehicle in place.

We are all saying forget the BTL for a reason. Wait until you are in a more stable financial situation.... preferably with current mortgage all paid off.

Getting a BTL so it can "pay for itself" is a very naive way of thinking if I'm honest. It takes lots of time and dedication as a landlord, problems with tenants, repairs, interest rates are usually higher and all of lifes other unexpected problems could cause a lot of issues for you, if you went down that road just now. Otherwise we would all be doing it and rolling in it.

money_maker_2

Stay on interest only
Get the BTL
Forget the pension advice

clear_as_mud

money_maker wrote: »

Stay on interest only
Get the BTL
Forget the pension advice

:eek: erm... why?