Property advice appreciated!

kingnothing83

Hi, I appreciate there’s quite a lot of different questions all at once here but any advice would be most appreciated

We definitely would like to:
- remain in our 2 bedroom flat for 3-5 years
- then purchase a 3-4 bedroom house either in Greater London or in the North East depending on circumstance

Property:
We have around £165,000 remaining on our mortgage with 33 years remaining on a property that cost £190,000 18 months ago. Property value is currently around £260,000-£300,000. The fixed rate 2 year mortgage ends in June 2014.

Savings and debt
We have less than £3,000 savings and £0 debt or student loans. Next summer we will receive approx £50,000 early inheritance.

Question 1 - Remortgage options:
We are considering the following:
- remortgage ASAP it should be possible 3 months before the fixed rate ends in June 2014 (therefore likely before any interest rate rise). We will likely owe around £163,000 on a property worth £260k-£300k. That’ll mean around 60-65% LTV. Monthly repayments would be around £653 per month.
- wait until the summer when we have our inheritance and remortgage - therefore only owing around £110k - around 40-45% LTV. Monthly repayments would be around £442 per month.
Which option do you think is best?

Question 2 - Mortgage length
Should we
- leave it at around 33 years to reduce payments and allow us to save more money (around £130 more per month)
- reduce down to 25 or so and pay off more quickly but save less (mortgage would increase by around £130 per month)

Question 3 - Savings and investments
- depending which options we choose and generally life(!) we can save £20k-£35k per year any idea where to look or shall I ask for some professional help on this?
- or shall I throw it all into the mortgage and aim to be mortgage free or close after 3 years?

Question 4 - In 3 years time
- do we sell the flat and have £300k or so deposit on the next place, we’ll be able to pay off the remaining mortgage relatively quickly and save for retirement
- or keep it, it's extremely rentable and right next to a tube station (approx. £1,200 p/m). It’d probably be best to remortgage to 75% LTV and take out the cash to pay for the next mortgage, we’ll be able to save less this way but have rental income as a retirement fund, in theory we may never sell it as we’d pay a lot of capital gains tax

Thanks for any thoughts!

Cisco001

Mortgage length - Can you keep the length and find a product which allow over payment every month?

Saving - if you can save £25 - 30k, why don't you overpay your mortgage? BTW, I would personally leave at £20k in saving/ stock investment as 'live' money in case you need money in urgent..

kingnothing83

Thanks for the reply! Yeah I'm sure I can find a good mortgage that will allow us to overpay so may leave the length at 33.

Not sure whether it would be best to overpay mortgage or whether we could do better investing elsewhere, perhaps best to split the risk like you say