Pay down or keep the cash?

windass

Hello every one

I am in a very fortunate position to own my flat via a mortgage but I also have a lot of cash to spare.

I estimate my flat is worth around £165,000 on which my mortgage is £113,000 = 68% LTV.

My issue is that I have around £20,000 in cash to spare.

I'm only going to use that money to get another mortgage in the next few years, probably via let to buy - I want to keep my current flat and buy another.

So should I put the £20,000 into paying down the mortgage in a lump sum (I can do this as I am on variable rate) and earn an effective 2.99% (my mortgage rate) vs 1% in my savings account.

That way I can use it an extra equity in getting a let to buy.

Any comments much appreciated

Thanks

opinions4u

Make sure you have a contingency fund in savings (e.g. 6 months net pay) - ideally in higher interest accessible accounts / ISAs.

But yes, beyond that I'd reduce debt that costs more than you can earn from cash deposits. Any expensive unsecured debt to look at first?

windass

opinions4u wrote: »

Make sure you have a contingency fund in savings (e.g. 6 months net pay) - ideally in higher interest accessible accounts / ISAs.

But yes, beyond that I'd reduce debt that costs more than you can earn from cash deposits. Any expensive unsecured debt to look at first?

I have six months expenses saved outside of the £20,000 and no debt.

Thanks for your help

Thrugelmir

Pay down the mortgage. As it's a guaranteed return. The future holds no certainty.