What to do with spare pennies?

TallulahBelly14

Just to update this, I've taken on board the points about my portfolio being sub-optimal / non-existent, and have made some progress:

- Seeing Halifax (current mortgage provider) advisor on Saturday to discuss better offers

- Research suggests that Nationwide are currently offering the best deals for our 55% LTV. They also confirmed that it's not a problem to have 2 names on the mortgage if we transfer it from Halifax (currently just my name on the mortgage). I was worried that it might incur a charge, but it doesn't appear to. I understand that I still need to update the deeds, so I'll look into that. Hopefully that doesn't involve paying stamp duty!? My income is slightly volatile on paper now that I own my own business, so it's unlikely that they'd lend to me on my own.

We're also in the process of selling a flat which the tenant has just moved out of, so I'm trying to work out whether to apply now, or wait until we've completed - lots of decisions!

- I've just applied to set up a Stocks and Shares ISA, so can transfer a chunk of the Cash ISA money into that next week.

I'm also thinking how I would have loved to be taught some of this at school - financial literacy doesn't come naturally to me, and it's a shame that one has to actively seek out this information. That's not an excuse mind - at my age I really should have cottoned on to all this stuff before.

AnotherJoe

TallulahBelly14 wrote: »

- Research suggests that Nationwide are currently offering the best deals for our 55% LTV. They also confirmed that it's not a problem to have 2 names on the mortgage if we transfer it from Halifax (currently just my name on the mortgage). I was worried that it might incur a charge, but it doesn't appear to. I understand that I still need to update the deeds, so I'll look into that. Hopefully that doesn't involve paying stamp duty!? My income is slightly volatile on paper now that I own my own business, so it's unlikely that they'd lend to me on my own.

We're also in the process of selling a flat which the tenant has just moved out of, so I'm trying to work out whether to apply now, or wait until we've completed - lots of decisions!

- I've just applied to set up a Stocks and Shares ISA, so can transfer a chunk of the Cash ISA money into that next week.

Does you husband or partner own another property? If so there's a big chunk of change you will lose on SDLT for a second home. Huge ! 3% on £780k !!!!!!!

Need more info - who owns the flat, is it the only one or do you own others? If its the only one, sell it first before putting partner* on deeds of your house, that will avoid the extra SDLT.

Forget the S&S ISA for now, do you even know what you will invest in it? If you dont, your money will go from earning a paltry rate of interest, to probably zero.

* what is the legal status of your partner. That could make a difference to SDLT (not just the xtra 3% SDLT)

TallulahBelly14

Hi AnotherJoe, that's a pretty big detail! The mortgage advisors at Halifax and Nationwide said I wouldn't incur SDLT but they might just have meant it was nothing to do with them.

You mention deeds - would I need to register the change of ownership myself, separately to the joint mortgage application? Is that a straightforward process?

Re .properties, we just have two between us:
1. House, valued at £780K - my name only
2. Flat, valued at £215K - his name only. This is being sold, expected to complete mid-Jan.

And re. legal status, we're not married. We've lived together for 14 years but I'm not really a party / wedding person. Although I could be tempted if there are indeed massive financial / IHT implications - what a romantic!

TallulahBelly14

Semi-positive update: Halifax have a two year fixed deal at 1.84% which would mean I could switch to a repayment deal and only pay £1,700 a month rather than my current £1,300 interest-only, which would be fantastic.

They also had a 5 year fixed rate which was higher - 2.59%, but I don't see why I would take that!?

I know there are some early repayment charges so I need to see at what level these would kick in. I'd ideally like to be able to make regular over-payments, but maybe I can pay off a lump sum to start off with and borrow slightly less than my outstanding balance at the moment.

I still have to go through the full review / affordability check tomorrow, so fingers crossed they deem me worthy. As they're my current provider they should be able to see that I've never missed a payment in the last 6 years. I'm just gathering up both our payslips, bank statements, SA302s etc in preparation.
Are there any other criteria I should be aware of in order to make a compelling case?!

terill

With your loan to value ratio increasing so much over the last 6 years you should definitely look in to remortgaging as you should get a very good rate as you currently have around 50% equity. You could probably halve your mortgage payments or start to do a full repayment for not much more than the amount you are paying now. LandC are the best for good advice. I would remortgage quite quickly as rates are going up and values may go down next year as Brexit gets nearer. Then spend some of the £80k on your extension and enjoy/invest the rest. Good luck!

CathW_2

Just another idea to throw into the ring - have you thought about an offset mortgage?

It is a mortgage where you have a savings pot linked to your mortgage account and only pay interest on the net balance. You can put money in and draw it back out whenever you want - that would mean that you could move your ISA savings and the lump sum into your offset account, and just pay interest on the remaining balance. If you needed the money for a rainy day, you could just draw it out.

That would save you interest on your mortgage without making a permanent decision to pay off the balance.

I have an offset mortgage with the Coventry at 1.69% interest.

TallulahBelly14

Interesting - thanks CathW, that can be a route to investigate if I get turned down, I'll look into who offers them in the meantime.

I had an interesting interview with Halifax - they asked a LOT of questions, some of which I'm not sure I gave the 'right' answers to, for instance, "What are your hobbies?", "How will you spend your retirement years?", "Are you planning any holidays or home improvements?", "Why do you want the mortgage paid off before retirement age" etc. I wasn't sure if home improvements would count in my favour or not, so just told the truth, that we'd like a kitchen extension at some point soon.

Unfortunately, because I'm now self-employed, but haven't done my first personal tax return yet (will do self-assessment in Jan), I count as having zero income. But there might be a loophole which they need to investigate. So for the next week I'm in a strange no-man's-land as far as they're concerned. It's ironic as I've earned more through my company this year than I ever did as an employee, but I suppose I'm more of a risk on paper than someone in a stable job.

I'm not too concerned, as this is only my first call - the financial advisor I've taken on suggested that I try to stay with Halifax if I can as there are no fees with internal product transfers, whereas changing providers would get expensive quickly. If Halifax doesn't pan out I can always look elsewhere for <2% rates.

And I'm seeing the FA in Jan to get all the other stuff under control. He thought having a proper will and life insurance should be my first priority, which I can absolutely see the sense in, should I be run over by a bus. I'm now really looking forward to getting my affairs in order! IFAs must do a roaring trade in the new year, with people making resolutions to be fiscally responsible!

enthusiasticsaver

Personally I would use the £80k to reduce the mortgage and start overpaying and saving for extension. That level of mortgage is high for someone self employed. Remortgaging will be tricky without a guaranteed salary. Affordability is a real concern for banks these days so having no salary on paper will be an issue. After 3 years accounts you are in a better position but in the meantime getting higher than 3.74% on savings will be tricky.

SuperHan

Please, please take additional stamp duty advice before transferring into joint names.

If your OH takes on half the mortgage, he is considered to pay that amount for the property and may need to pay SDLT on that amount. He owns another property too, so he may also need to pay the 3% surcharge and then claim that back if he sells the flat within 18 months.


I don't know enough about your situation to say definitively, but this definitely feels like a transaction that will incur a SDLT charge, so maybe speak to a conveyancing/tax solicitor before making ANY ownership changes!

tgroom57

I've had (smaller) mortgages with first Nationwide and now Halifax. I prefer Nationwide - and at the time Nationwide were agreeable to my partner's self-employed accounts. I'd choose Nationwide more so now because of the Halifax crash awhile back, and the subsequent tightening of belts by the group that Halifax is part of.

It doesn't make commercial sense for Halifax to lend you the same money at a cheaper rate. Why would they ?

I don't know how the figures stack up for changing mortgage provider, but I'd want to know so that I could consider the decision.