Advice re: £80k mortgage free or invest?

squirrelchops

Dear all

I have bought a house for £150k cash (borrowed from relative and some of my own money) - this was due to it being a repossession and I had to move very quickly.

Currently I have another house on the market for £350k - I own this outright having inherited it some years ago. There will be a capital gain to pay on approximately £100k

Is the best bet always to be mortgage free?

By this I mean the plan was to remortgage new house and get mortgage for £80k to pay back the money lent to me.

Is this sensible or should I use the proceeds of house sale to be mortgage free?

The reason I am asking is that I could see how £80k could be better invested elsewhere and make a higher rate of return than the equivalent monthly cost of the mortgage.

Financially paying the mortgage is no issue - I earn £33k and am 37 so many years more of gainful employment. I work in a field where there is no fear of job shortages.

Any advice gratefully received

squirrelchops

Anyone? 300+ views on 2 threads and not one word of advice......

Eco_Miser

Pay back your relative from the proceeds of the other house sale, then decide if you want to take out a mortgage to invest in that opportunity you can see.

edinburgher

Completely agree, paying off relatives should be your first priority.

Ryan_Futuristics

I look at this one the other way round and say: Would I *borrow* £80k to invest in the stock market? (Because apart from stocks & shares, there aren't many good options at the moment)

And for me the answer's always no ... You can probably get a better return, but you're still making someone else money - and as I always find out when I lend people money, life has a habit of throwing up unexpected problems when you're in debt ... Good to develop an aversion to it

Better to start strictly investing a portion of your income

Radiantsoul

I would pay back your relatives.

squirrelchops

Doh.
Realise now I have reread my post how it sounds.

Right, after I have paid back relative which was £70k what do I do about the other £80k I have in the house.
Should I remortgage and have 80k to invest elsewhere or be mortgage free.

Sorry must have been tired when I posted originally!

Simker

I'm planning to pay of my mortgage with a pending inheritance and invest what I would have been paying on a monthly basis.

racing_blue

squirrelchops wrote: »

I work in a field where there is no fear of job shortages.

Are you a scarecrow?

racing_blue

squirrelchops wrote: »

Is the best bet always to be mortgage free?

This is an easy question. IF you can be sure of a better return by saving or investing, then that would be A) the best; and not really a bet.

"IF"!

squirrelchops wrote: »

should I use the proceeds of house sale to be mortgage free?

This is a more difficult question. You say that you can see how £80K could be invested elsewhere at a better rate of return than the interest on your mortgage. But what are your plans and thought processes? What is your mortgage rate?

For example, I have an interest only mortgage and have opted to invest in S&S ISAs rather than repay. My thought process:

1. Mortgage interest rate fixed at below 3%
2. Equities have historically returned about 8% PA although I accept this is no guarantee of future return. But it feels like "the best bet"
3. One day I might sell this house and buy a smaller one- in that case I would repay the mortgage and keep the S&S ISA for essentially tax free income. Doesn't work the other way.
4. Investing is kinda fun, repaying is kinda dull, it is a bit of a game and I like games and no-one wants to play chess with me in real life although there is always chesscube.com

squirrelchops

racing_blue wrote: »

Are you a scarecrow?

That would be a nice name for what some people call people who do what I do!

Thank you for your advice.

Having thought about my dilemma today, I have decided that a period mortgage free is going to be the best bet at the moment as I am also moving areas and it will take the pressure off. I can always 're jig' where my money is when I am a bit more settled.