How should I invest £50k? Read on..

Sellotape

Given the financial climate and expectations, please could you advise how to invest £50-60k based on these circumstances:

- Already own a 1 bed flat within a period house with partner in central London
- Already made improvements where we can to increase value, nothing else needs doing
- We owe £220,000 on this mortgage at a rate of 3.99%
- Our joint income is around £75k and we have no dependents (yet)
- We think current property has increased in value by £35k
- We will need a bigger house in 3 or 4 years to start a family: this is our biggest cause of concern as the London housing market seems unsustainable. Prices are rising every week.:eek:

Any options on how to invest would be greatly received. At present, it's doing sweet FA in my rubbish savings account.

Thanks

Marc.

planteria

it depends how soon you expect you want to move home. 3 or 4 years will be deemed 'not long enough' to invest. therefore you are probably best to just save as much as you can, and maximise the rates you receive by using Regular Saver accounts and utilising Current Accounts as Savings accounts.

potentially look at West Brom and Nottingham BSs for the former, and Nationwide and Santander for the latter.

Pitchshifter

buy to let cars.com

grey_gym_sock

3.99% is not brilliant - could you get a lower rate? if your LTV is too high, consider using some of the cash to reduce the mortgage, to take the LTV to a level where rates are lower.

Sellotape

Thanks.
Grey gym sock - we're not in real need of increasing our disposable income at the moment, as our monthly repayments are OK. Can you tell me what the advantage of paying down on teh mortgage would be? I might be confused.

The long term goal is to be able to buy a second rung house in 3 years. I'm worried that if I just leave the 50k in a savings account, I won't be able to match the percentage rate at which house prices around here are increasing.

Thanks again for any advice.

xylophone

Might you be better off considering where you would like to live when you start a family, selling the flat and trying to buy a house there now?

atush

Sellotape wrote: »

Thanks.
Grey gym sock - we're not in real need of increasing our disposable income at the moment, as our monthly repayments are OK. Can you tell me what the advantage of paying down on teh mortgage would be? I might be confused.

The long term goal is to be able to buy a second rung house in 3 years. I'm worried that if I just leave the 50k in a savings account, I won't be able to match the percentage rate at which house prices around here are increasing.

Thanks again for any advice.

No one is telling you to increase your disposible income, more like save more. 3.99% is not very good, you could do better and save the rest. LTV determines the rates you can get on a mtg, and the best are for 75% or less. If you only have an LTV of 90% you can't get the best rate.

In your case, with 3/4 years until a move, i'd keep saving the 50K at the best rate you can find, and perhaps only invest in S&S isas new money monthly.

Otherwise, the idea of buying at least a 2+ bed flat or house in an area you would find starting a family to be OK is an excellent idea. Solves both the future and price rise problems. Is 50K enough to do this?

R_P_W

Sellotape wrote: »

Thanks.
Grey gym sock - we're not in real need of increasing our disposable income at the moment, as our monthly repayments are OK. Can you tell me what the advantage of paying down on teh mortgage would be? I might be confused.

The long term goal is to be able to buy a second rung house in 3 years. I'm worried that if I just leave the 50k in a savings account, I won't be able to match the percentage rate at which house prices around here are increasing.

Thanks again for any advice.

So your happy paying more interest on your mortgage than you might need to? Look at a mortgage calculator and run some numbers....you will be amazed what you can save by lowering your rate and/or making overpayments

jimjames

R_P_W wrote: »

So your happy paying more interest on your mortgage than you might need to? Look at a mortgage calculator and run some numbers....you will be amazed what you can save by lowering your rate and/or making overpayments

Very true.

If you are at 90% LTV and by putting in some money along with the rise in value can get below 75% then you may be able to get a rate like 2.99% or lower. That will give you a boost to saving each month that you can then put towards the next property.

kidmugsy

Make your mortgage cheaper by following the advice you've been given above. Then put your surplus income into the best regular saver accounts you can find.

Alternatively, follow the other suggestion of moving now.

Sellotape

Very true.
I guess I would need to work out the difference between paying down on the mortgage to allow us to save more (best interest rate for savings is 3% in Santander I believe) and put that towards next house, VERSUS, jumping on the second rung bandwagon now before things get even more pricey, potentially with a bigger loan.

I’m less interested in stocks and shares given that we’ll need to access the capital in 3 or 4 years.

Thanks once more.