Where to save when mortgage is paid off?

nirish

I'd be very interested to hear if anyone has any ideas outside of what I'm aware of already to save approx 3k a month.

I'll shortly finish my mortgage on a modest first home with my partner. The monthly amount mentioned above will still be saved towards our future home which we don't want to buy until children will be a part of our lives.

In the meantime where should I save 3k a month towards a future home when interest rates are so paltry, the investment term is unknown so can't afford to lock money away for an extensive period either!

AnotherJoe

Santander123

nirish

AnotherJoe wrote: »

Santander123

A decent option for sure, the interest on 20k would see me through six months. Nuisance factors are pay in £500 a month subsquently (not a big issue) and have at least two active direct debits (more of a pain)!

Duckyduck

What are you already aware of and what's your attitude to risk? If I were in your position I'd be looking to invest in a few index tracker funds - both British and international. the diversity reduces the risk (though it'll never be risk free, the U.K. will likely be particularly volatile in the short/medium term until the consequences of Brexit are known.

Savings wise there's a few regular savings paying 6%.

Mojisola

nirish wrote: »

A decent option for sure, the interest on 20k would see me through six months.

You can have one account each plus a joint account so that's £60k.

nirish

To be honest I'm not aware of much beyond standard ISA, regular savings and fixed savings accounts. I did have a couple of index tracker funds many years ago before I started ploughing money into the mortgage. I'm not adverse to some risk with a proportion of the money but are these seen as more suitable for investment over the longer period? I've certainly got no idea if investing in British funds at the moment is remotely wise or not!

Thrugelmir

Cash is the only option. Anything else carries risk and the possibility of losing money.

nirish

Mojisola wrote: »

You can have one account each plus a joint account so that's £60k.

Yes of course an account each, didn't allow for that! A joint account on top of this is new and surprising news though. Will be needing a lot of direct debits given I want to keep my current account with natoinwide!

Mojisola

nirish wrote: »

Yes of course an account each, didn't allow for that! A joint account on top of this is new and surprising news though. Will be needing a lot of direct debits given I want to keep my current account with natoinwide!

But they only need to be set up once so it's not much hassle.

Do donations to favourite charities if you haven't got any other DDs.

nirish

Mojisola wrote: »

Do donations to favourite charities if you haven't got any other DDs.

Again something I hadn't considered to meet this criteria :beer:

Pincher

Double up, buy a bigger house.

Get a Japanese YEN ten year fixed rate mortgage for 1.5%.
Japanese YEN is very high right now.

Borrow JPY50million at GBP1:JPY140, ~=£357k.
At 60% LTV, that means you can buy a £600k house.

At 1.5% fixed for ten years, you can afford to borrow more than the silly 3.5 multiple. Whether the lender will lend, I don't know. They always say no to me, because I don't look like a virgin they can abuse.

At the end of ten years, re-mortgage to a sterling mortgage.

If things go according to my scheme, the exchange rate goes to 1:180, so you only need to repay £278k.

You have made £79k = 357k - 278k . I don't know if the HMRC would even ask for capital gains tax in this scenario, as you did not in fact buy or sell anything.

In the mean time, you have been living in a nicer house, paying 1.5% interest on £357k, which is about £100 a week. If the Japanese YEN depreciates against sterling as I wish, it will be less than £100 a week.

Yes, I know, that assumes you can get an interest only loan, and you would have been repaying the principal otherwise. So, you try to get a 40 year term mortgage, to try to reduce the principal repaid in ten years.

I think you'll find, the monthly repayment is less than £2,000 , so you still have £1,000+ from your £3k to save per month.

Assuming the house goes up in value, and the Japanese YEN depreciates, you are onto a winner financially. You have also enjoyed a bigger house at a lower interest rate.