Should I pay off my mortgage discussion

Welshlassie

YummyMummyBigBummy wrote: »

Sorry if these questions have been asked before... But I wonder if anyone can give us a bit of advice regarding making overpayments into our mortgage versus savings please?
Our son (who is 6) has been saying since he could talk that he wants to be a vet when he grows up (great news!) so we need to start planning now for his uni bills and so on.
We are not a rich family at all (we have an total annual income of about 25k) and so need to start now to make sure we can help him out when the time comes.
We owe about 90k on our repayment mortgage over the next 21 years at a rate currently of 5.95% Remortgage due in June 2010
Having done some sums I have worked out that we would need to save 80 pounds a month in order to fully pay for Uni for our son in 12 years time bearing in mind it's a 6 year course. (Does this sound about right? Or have I got it completely wrong!?)
So my question is; would it be better to pay this 80 pounds off the mortgage each month or stash it away in a savings account for him? I can see the sense of paying off the mortgage and would love to be mortgage free sooner rather than later, but we obviously will need access to this money when the time comes for him to go to Uni, so which way would be better? This is just about the most we can afford to spare each month, so I really want to make sure that it is working as hard as possible for us.
Any help would be very gratefully received!

£80 pm for the next 12 years will give you £11,520 plus any interest (at 4% you'd be looking at £14K). This may be enough, but would depend on uni fees, cost of living etc, and how much you want him to contribute towards it.

If you OP on the mortgage it would only reduce your term by 4 years and 2 months which would mean you were still outstanding a mortgage when he started uni and have nothing to help him with.

Ultimately it is your decision how you do it, are you able to OP/save any more? Maybe save the £80 per month and OP the additional onto the mortgage.

Radiantsoul

YummyMummyBigBummy wrote: »

Sorry if these questions have been asked before... But I wonder if anyone can give us a bit of advice regarding making overpayments into our mortgage versus savings please?
Our son (who is 6) has been saying since he could talk that he wants to be a vet when he grows up (great news!) so we need to start planning now for his uni bills and so on.
We are not a rich family at all (we have an total annual income of about 25k) and so need to start now to make sure we can help him out when the time comes.
We owe about 90k on our repayment mortgage over the next 21 years at a rate currently of 5.65% Remortgage due in June 2010
Having done some sums I have worked out that we would need to save 80 pounds a month in order to fully pay for Uni for our son in 12 years time bearing in mind it's a 6 year course. (Does this sound about right? Or have I got it completely wrong!?)
So my question is; would it be better to pay this 80 pounds off the mortgage each month or stash it away in a savings account for him? I can see the sense of paying off the mortgage and would love to be mortgage free sooner rather than later, but we obviously will need access to this money when the time comes for him to go to Uni, so which way would be better? This is just about the most we can afford to spare each month, so I really want to make sure that it is working as hard as possible for us.
Any help would be very gratefully received!

Gotta love the forward planning!
To be honest there are loans and such like to send children to university. And vets earn a lot of money. I would say that your son can fairly easily borrow the money and is likely to enjoy a much higher standard of living at the end of his course!

jamesd

YummyMummyBigBummy wrote: »

Our son (who is 6) ... so we need to start planning now for his uni bills

You're looking at completely the wrong options for this. Equities in the form of funds in a stocks and shares ISA are where you should be looking for a term that long. During the last five years you'd look to gradually start switching to corporate or government bond funds, still within the stocks and shares ISA.

If you have no idea what to pick, I suggest that you consider the Invesco Perpetual Income fund, Accumulation (Acc) units.

I haven't looked at Child Trust Fund age rules. Isn't he eligible for that, so you could put the money in a CTF in his own name? If he is, F&C offer some good fund options.

JoshySquashy

appreciate your advice on my dilemma. In the next few years I'd like to buy a second property as a long term rental investment, (at the moment don't have a big enough deposit)

Currently paying an extra £500 a month off my nationwide mortgage (~80k left @ 5.44% 3 years left on current agreement).

Should I keep paying this off for the time being and see how mortgage deals improve or should I start saving this £500 as a deposit for the future?

I suppose I'm asking for a prediction on future mortgage deals.

cheers

YummyMummyBigBummy

Thanks so much to you all for the help and advice. I do try and plan in advance (but it doesn't always work!) so hopefully I am starting soon enough to be able to help him when the time comes.
I realise that he may well get help in the form of loans and so on but will such things even exist in 12 years time? I'd rather save now and be able to help him even if he doesn't need it, than bank on the help being there and then finding out that there's nothing for him. Worst case scenario I suppose we can keep the money and splurge on ourselves if it turns out his course will be fully funded! Or be sensible and he can use it as a deposit on a house.
Thanks for the tip about the CTF. He has one of those and I hadn't really thought about putting the money into that. I was just so determined to be mortgage free but I guess that will have to wait.
Unfortunately vets don't earn all that much. I'm a veterinary nurse and believe me when I say that vets really don't get very much considering all the time and effort they spend at Uni getting their qualifications, and the long hours and difficult conditions they work in afterwards. A doctor would earn about 3-4 times as much as a vet, for example and the academic commitment is very similar. I have tried to persuade my son to choose something where he would earn more, but he's determined that looking after animals is where his heart lies! Gets that from me I suppose.
Thanks again to everyone who replied to my post. More research needed I think, but I have a good idea of where to start now.
Cheers

Scottyb1969

Hi, I need some advice, I have a £56k offset mortgage with the Clydesdale Bank with 22 years to run, the offset mortgage account is on a 5 year deal and we are now just into the second year, it is linked to 6 current accounts that my wife and I currently use with a total of between 6-8k in the 6 accounts from the start to the end of each month. The offset mortage rate is approx 5% and we save on average about £30 per month on the interest for the 6 accounts.

We also have £18,500 in a ISA account with the Clydesdale Bank, the interest rate on this account is falling and now only pays around 3%.

Should I take our savings out of our ISA and put it into our offset mortgage? or stick with our ISA?

colourfilm

Scottyb is there a penalty for overpaying?

StuartGMC

Scottyb1969 wrote: »

Hi, I need some advice, I have a £56k offset mortgage with the Clydesdale Bank with 22 years to run, the offset mortgage account is on a 5 year deal and we are now just into the second year, it is linked to 6 current accounts that my wife and I currently use with a total of between 6-8k in the 6 accounts from the start to the end of each month. The offset mortage rate is approx 5% and we save on average about £30 per month on the interest for the 6 accounts.

We also have £18,500 in a ISA account with the Clydesdale Bank, the interest rate on this account is falling and now only pays around 3%.

Should I take our savings out of our ISA and put it into our offset mortgage? or stick with our ISA?

As you are offset I assume no penalty for OP, but, do consider you can't "get back" this ISA allowance once you've cashed it in. I assume you have pensions, plus additional savings for the emergency funds (3-6 months salary), plus your annual saving needs for items like white goods, holiday, replacement car etc needed over time? If so, why not put those into the mortgage and keep the ISA as the "emergency" fund, so you call on it only if really needed?

Remember, in 4yrs time you could move to an offset with a company which allows offsetting the Cash ISA too, whilst keeping the funds in their tax-free wrapper for the time once you are mortgage-free.

That said, if you check my thread you'll see we're doing things a little differently in our portfolio. Have looked at Cash ISA but presently we'll get better for OP on the offset, some savings offsetting, plus Stocks & Shares ISAs for growth (in theory :eek:) and we'll sort out Cash ISA thereafter plus other investments.

savingscarlotti

Hi all

Does the premise of paying off a credit card always come first even if your credit card is on 0%?
What with the lowering base rate, we're in the position now of having money spare each month. We were OP the mortgage but I think we should be reducing the debt we owe on the credit card, even though it's on a 0% one at the moment. I can keep moving it around when the 0% expires but it still needs to be paid off right?

So do I focus on the card or split the difference between the two?

Thanks in advance.

jamesd

You should put into an interest-bearing savings account the money that you will need to clear off the 0% card if you're not able to get another 0% deal. Any extra money could go to the mortgage if that is at a higher rate than the after tax rate of the savings.