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£350k mortgage vs our savings...

edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
2 replies 836 views
scoobydoo789scoobydoo789 Forumite
11 Posts
Seventh Anniversary Combo Breaker
edited 30 November -1 at 1:00AM in Mortgage-Free Wannabe
Looking for some thoughts on our situation... My wife and I are mid-30’s, one child under 5, no loans or other debt. We're pretty risk averse, but think life is short and kids grow up quick - so work hard but enjoy ourselves (without going nuts).

Debt: We have £350k outstanding on our mortgage (3.39 % fixed for another 2 years) on a £650k house.

Savings: We have £90k in cash isas, £60k in savings accounts, and £120k in shares – so £270k total’ish available to use as we want.

We put money away each month for living costs (car, holiday, repair house etc). but we are unlikely to be able to add to our broader savings accounts for the forseeable future as the cost of childcare etc. leaves us with little spare at the end of the month.

The question is – given we have a reasonable amount of accessible cash, is it really worth paying more into our mortgage, or would we be better to take the money and invest it with a financial advisor?

I hear people muttering of making 7% a year but a bit of me thinks – well if I achieved 7% on £270K then took 1% off for advisor fees, then paid 40% tax on what I made, I’d be left at 3.6% of £270k which is £9720 a year – but I’d still have 3.39% interest on £350k which is £11865 a year; or if I sunk £270k into my mortgage I could have an £80k mortgage and if I paid it off at the same rate each month, and have no mortgage in 5 years but also have very little cash accessible.

So my gut feel is that paying down the mortgage is the right thing to do, but with cash so cheap to borrow, and a sense that ‘once I let my cash go I’ll never free it up again’ – is the mortgage the right really the right thing to do? Could I ever get my cash out again if I sink it into the mortgage?

Perhaps this is more of a question for the investment forum – I’m lost with what to do though…

Any thoughts / advice welcome!

Cheers

Replies

  • TheShapeTheShape Forumite
    1.7K Posts
    Fifth Anniversary 1,000 Posts Name Dropper Combo Breaker
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    I'd definitely put this question to the savings and investments forum.

    Add details about your salaries, pension details etc. You mention Cash ISAs but what about S&S ISAs?

    You'll probably get advice on multiple options on the savings and investments forum.
  • JonbvnJonbvn Forumite
    5.6K Posts
    Part of the Furniture 1,000 Posts
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    OP,

    Your mortgage rate is quite high, given that you are around 60% LTV. Worth doing some numbers on remortgaging considering ERC's etc.
    In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot:cool:
This discussion has been closed.