Should I pay off my half of the mortgage or invest elsewhere?

havingaball74

Hello all, I hope you can help...
My partner and I have a joint mortgage (joint tenants) and have put down an equal deposit. We are wanting to fix our mortgage and have found deals with an interest rate of under 2%. I have always liked the idea of being 50/50, but should I use my 60k savings to pay my half of the balance off and be mortgage-free (leaving my partner with a smaller mortgage alone) or invest the 60k somewhere else? Thanks in advance.

havingaball74

Or would an offset mortgage work? I believe that would mean the interest rates are higher?

steampowered

I personally would invest the money somewhere else. You can quite comfortably get a return of more than 2% through investing in stocks and shares (most fund managers aim for 6% as a minimum), ideally done through a balanced fund in a stocks and shares ISA.

TCA

Playing devil's advocate for a moment, even if you paid off "your half" of the joint mortgage, legally you would still be jointly liable for the mortgage remaining. So although we don't anticipate the worst, should you ever split from your partner, you could legally still have half a mortgage to pay for, whilst your partner gets half of the equity in the property without paying in half. Just saying.

Zippeh

I agree with the above. No one can predict the future. There is no "your half" of the mortgage in the bank's view. Invest it and only pay off when you both can.

havingaball74

Thank you all. My gut instinct has always been to keep the mortgage 50/50 so that is good.
Would you look into offset mortgages or just invest the money in a stocks and shares ISA? I may need to access part (if not all) of the 60k without too much hassle.

DiggerUK

I'm with the 'get rid of a mortgage asap' brigade.
In your case, and taking the joint and separate liability you have re the mortgage, I would suggest you encourage your partener to go even stevens with overpayments.
You pay a k, they pay a k..._

TheShape

havingaball74 wrote: »

Thank you all. My gut instinct has always been to keep the mortgage 50/50 so that is good.
Would you look into offset mortgages or just invest the money in a stocks and shares ISA? I may need to access part (if not all) of the 60k without too much hassle.

Don't invest money in a S&S ISA that you may need access to. The nature of an investment in stocks and shares means the value can decrease. If you needed access at the point your investment had fallen in value you would realise a loss.

The Banking and Budgeting forum has plenty of ideas for earning 3%+ interest with easy access on at least part of your 60k.

There are some ideas on this thread also (Regular Savers etc).

ArmyDilllo

TheShape wrote: »

Don't invest money in a S&S ISA that you may need access to. The nature of an investment in stocks and shares means the value can decrease. If you needed access at the point your investment had fallen in value you would realise a loss.

This.
The markets are quite high at the moment.
The "smart money" investors seem to be anticipating some level of imminent correction though, which might reduce the value of bought stock or be an opportunity for anyone with cash burning a hole in their pocket.

Another idea with S&S is what I'm doing with BP (investing directly in shares is a new experiment for me, but working well so far); BP's board is maintaining a share dividend of 7% and seems keen to demonstrate they can keep that level.
I put a sizeable (for me) chunk into BP during the year but I'm taking £2.5k just in dividends (4 x quarterly payments totalling about 6.9 something %, I think it is).
I was also fortunate enough to get in when the market was still lower and saw an opportunity.
Because of that my investment has increased in a pant-warmingly nice way too.

atush

havingaball74 wrote: »

Thank you all. My gut instinct has always been to keep the mortgage 50/50 so that is good.
Would you look into offset mortgages or just invest the money in a stocks and shares ISA? I may need to access part (if not all) of the 60k without too much hassle.

An offset mtg is just like a reg mtg. Any overpayments would be split with yoru patner- even if only you paid.

Split your 60K, and keep the amt you might need to access in cash (in current accts) and put some in S&S isas.

If your partner can overpay, overpay with them.

And dont forget pension contributions,

steampowered

I personally would keep anything I might need for temporary emergencies in a savings account (perhaps enough to cover a month's expenses if you lost your job?), and put the rest in a stocks and shares ISA.

If you don't know what you are doing with investments it is probably best to invest through a balanced investment fund rather than trying to pick individual shares.