Extend mortgage to fill ISAs?

ValiantSon

Audaxer wrote: »

I'm glad you told the truth as it seemed to me the right thing to do. I'm sure things will work out okay for you as the markets may well be lower by the time you receive the money to invest.

If you did have a lump sum to invest in ISAs just now, where would you invest it? I have lump sums I could invest now, but am I thinking it wouldn't make enough gains over the next 3 or 4 years to offset a 30% correction that I read has a good chance of happening within that timeframe in view of the long bull run we have been in?

As with all such articles, this is purely speculation. There may be a 30% correction in the next 3-4 years, or there may not. Nobody knows. All such articles and comments are just noise that needs to be tuned out.

Audaxer

economic wrote: »

Can you send a link where you read about the 30% correction? If not then who said it and what makes whoever say it qualified to suggest a 30% correction?

I do think a 30% in the next few years is likely. However that will probably follow a rise of 40-50% further from here. But this is just a guess.

It was the following post from jamesd that made me think it might be better to wait for a bigger correction before investing further lump sums:
http://forums.moneysavingexpert.com/showthread.php?p=73865274&highlight=don
If the correction doesn't happen until markets have risen a further 40-50% from now, then obviously it would be worth investing further lump sums now. I was just under the impression that it was more likely that we are nearing the end of the long bull run, but I raised the point as I'm interested in other people's thoughts on why they think it would still be better to invest lump sums now rather than wait.

TheShape

I'm quite interested in this thread as about 6 weeks ago I applied for further borrowing from HSBC. I do have some home improvements to make but in reality, I was looking to borrow an amount of money in excess of the amount required for the work.

With the Lifetime ISA available I am hoping to maximise subscriptions each year but this is going to be difficult to maintain along with maintaining payments to my SIPP and making home improvements.

If I were to be buying my home now, I would almost certainly look to borrow a greater amount than my current mortgage amount and I wouldn't expect to have much problem doing so. My current LTV is below 25% even taking into account HSBCs very conservative valuation (£300k vs the £350/360k that very similar properties are selling at).

Borrowing an amount of money that I could pay back over a period of approx 28 years would provide a great deal of flexibility in funding home improvements and investments.

Ultimately I was declined. I do have Credit Card balances totalling approx £29k with an income of £27.5k and a number of credit applications for CCs and current accounts so I'm not surprised. I plan to reduce the CC balances as the 0% periods expire and apply again later in the year once the CC balances are lower and after an expected payrise.

Thrugelmir

ValiantSon wrote: »

There may be a 30% correction in the next 3-4 years, or there may not. Nobody knows.

Volatility of +/- 7.5% is far more common than many people may realise. Smoothing is only thanks to the Central Banks. Once back out in open water. People may well be not so willing to buy everything as everything is going up. Instead being more selective and cautious.

ValiantSon

Thrugelmir wrote: »

Volatility of +/- 7.5% is far more common than many people may realise. Smoothing is only thanks to the Central Banks. Once back out in open water. People may well be not so willing to buy everything as everything is going up. Instead being more selective and cautious.

That doesn't counter my point, which was that nobody knows whether there will be a 30% correction or not.

enthusiasticsaver

It seems pointless to try and time the market. We have had a few large gifts and inheritances and we have just used the S and S ISA limit for each of us for that year and invested the rest unwrapped. BED and ISA it each year to get £40k in until it is all wrapped in your ISA.

That of course depends on the eventual purpose for the money and whether there are two of you. We gifted a lot to our adult DDs too to help with buying property. How old is your son?

Alexland

Well my son is only a toddler and we have already filled his JISA this year and then to do the same next year (within 12 months of opening) to get the Orbis no-fees until 18 offer. That's about all he will get from us in his name for now.

I just did a credit check with Zopa with reason 'Other' and they just offered to lend me £10k at 2.9% which if early repaid within 6 months would be around £85 interest with £45 cashback so a net cost of £40.

With a bit of belt tightening for the remainder of the tax year that should just about allow us to use our full ISA allowances.

Alex

ValiantSon

Alexland wrote: »

Well my son is only a toddler and we have already filled his JISA this year and then to do the same next year (within 12 months of opening) to get the Orbis no-fees until 18 offer. That's about all he will get from us in his name for now.

I'd say that he was a pretty fortunate boy!

Alexland wrote: »

I just did a credit check with Zopa with reason 'Other' and they just offered to lend me £10k at 2.9% which if early repaid within 6 months would be around £85 interest with £45 cashback so a net cost of £40.

With a bit of belt tightening for the remainder of the tax year that should just about allow us to use our full ISA allowances.

Alex

That's not bad at all! It almost makes think about doing the same, but only almost.

economic

Do zopa lend to anyone and for any reason??

Alexland

There are probably some restrictions on who they would lend to however for the soft credit search they seemed happy with me clicking the 'Other' reason. Maybe later in the process they check you are not using the money to finance exporting weapons to North Korea....