Investing overpayment funds 25 August 2007 at 5:19PM in Mortgage-Free Wannabe 2 replies 575 views

molit

Right - I am just under 30, and on my own with no commitments (kids/car loans, wives etc), and moved last month. I earn about £30k a year and have a 100k mortgage (about 60% LTV), over the next 25 years, fixed at 4.7% for 2 years (I think I got lucky with a deal, which I didnt take up immediately). Fee free overpayment once a year of up to 10%.

Savings at the minute are
rainy day - cash isa = 3.4k
shares £1.8k
s&S isa ~£200
overpayment fund ~6.2k (currently in a cash isa/building society)
company share save scheme to pay out about £3k a year in a couple of years, once a year (buying shares before tax, and getting bonus ones)

At the minute I reckon I reckon I could pay the mortgage off by the time I am 40 (about 11 years), if I save relatively hard, dont splash out on nice cars etc. However, I am not risk averse, and dont mind putting in a bit of effort, and while I would hate to loose the lot, if I tried, and didnt succeed fully, I can brush myseklf down and start again.

part of me would like to use the overpayment to fund investment in property overseas, either rental, or doing up, part of me thinks buying shares could be a way forward, part of me says dont be so stupid. I do like to travel when I get the chance, and this is what the paying off mortgage would allow me to do.
What are peoples thoughts are as to ways forward?

thanks

ailuro2

Things could change for you- you might find yourself loved up and having a family within a couple of years!
If this is not the case then you can look at longer term investments like shares/property/bonds, if your future lifestyle may be significantly different then go for the shorter term,higher interest savings accounts.

Property as an investment is long term, and not the best way to make money it might have been in recent years. If you have your heart set on something,though, then maybe it's the best thing for YOU to do. We are all different, and sometimes its the journey to being mortgage free that is just as much fun as spending the extra cash once we reach the point of having the extra money.

molit

Hi

Cheers for the reply - though scary thought about me with kids. Been having a look round, and to actually get into propetrty it strikes me as you need a bit more than I have - I dont want to extend my mortgage to invest, and unless you are very lucky, and go abroad, there are not major benefits - doubling the risk on a small amount might only increase profit by 1k.

My one thought is to maybe tlook at buying off plan in either croatia, bulgaria, or possibly india, as this seem cheaper, but gut instinct says this is more risky - guess this is more a question for the house buying forum though, but welcome peoples thoughts