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Mortgage v Savings Question
cloudwalker_3
Posts: 52 Forumite
I have a question about paying off a mortgage. It's also about savings and investments so I'm posting it in two places (I also posted it to House Buying, Renting & Selling). Apologies for this but I really struggled to know quite which which thread to place it in.
I'm due to get a chunk of money from my parents shortly, around £25k.
I have an outstanding mortgage on a flat that I currently let out to tenants (this brings in around £975pm). The mortgage stands at £20,875. There are about 15 years to run and monthly payments are currently £158. I'm on a 10 year fixed rate which ends in 2015. The flat was was brought as a long term investment for my pension.
If I fully repay the mortgage early, I cop an early repayment charge of £90. However I can pay in an extra £500pm with no penalty.
My dilemma is this:
Do I part play off the mortgage by over paying over the next three years (minus £1,500 - to keep me on the radar as a good customer as at some point I want another buy to let mortgage to buy a second flat) and invest the remaining £7k? If I do invest this £7k, where to put it? Interest rates are so bloody low right now that everything looks crap!
Or should I just keep steadily paying down the mortgage and look to invest the whole £25k with a view to it growing into the next deposit amount for the next by to let flat?
Or something else entirely?
Any helpful advice would be gratefully received.
Thanks!
:question:
I'm due to get a chunk of money from my parents shortly, around £25k.
I have an outstanding mortgage on a flat that I currently let out to tenants (this brings in around £975pm). The mortgage stands at £20,875. There are about 15 years to run and monthly payments are currently £158. I'm on a 10 year fixed rate which ends in 2015. The flat was was brought as a long term investment for my pension.
If I fully repay the mortgage early, I cop an early repayment charge of £90. However I can pay in an extra £500pm with no penalty.
My dilemma is this:
Do I part play off the mortgage by over paying over the next three years (minus £1,500 - to keep me on the radar as a good customer as at some point I want another buy to let mortgage to buy a second flat) and invest the remaining £7k? If I do invest this £7k, where to put it? Interest rates are so bloody low right now that everything looks crap!
Or should I just keep steadily paying down the mortgage and look to invest the whole £25k with a view to it growing into the next deposit amount for the next by to let flat?
Or something else entirely?
Any helpful advice would be gratefully received.
Thanks!
:question:
.
Michael
When I give food to the poor, they call me a saint.
When I ask why the poor have no food, they call me a communist.
-- Dom Helder Camara
Michael
When I give food to the poor, they call me a saint.
When I ask why the poor have no food, they call me a communist.
-- Dom Helder Camara
0
Comments
-
What is the interest rate of your mortgage?
What interest rate, after tax, can you expect from a savings (or current) account?
What are your other circumstances? Might you need/want the money elsewhere? Marriage? Replace knackered car? etc
Have you a pension plan? Other investments? Other savings?
there are many factors to consider before serious advice can be given.0 -
cloudwalker_3 wrote: »(minus £1,500 - to keep me on the radar as a good customer as at some point I want another buy to let mortgage to buy a second flat)
Will have no bearing on your application.
Is paying down the BTL mortgage tax efficient? As will have the impact of increasing your taxable income.0
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