Investment suggestions

ententecordiale

Hi All,

After being made redundant recently I've had a rethink about how to organise my savings.

I fortunately found a new job which whilst is a on a lower income still fine. I own a house that I rent out but has a 68k mortgage. I have around 100k in cash that I need to decide what to do with.

a) Pay off the mortgage and have around 30k to invest

b) Keep the mortgage and invest the bulk of the 100k

Plan A has the advantage of being debt free and saving on interest over the next 13years left on it but I will then incur a higher payment to the Inland Revenue I think as I won't be able to ofset the mortgage interest

Plan lets me invest more, benefit from mortgage interest on my self assessment but I will still have a debt and the interest earned I guess will be less than what I pay on mortgage interest

At this point I'm looking for ideas as I'm aware that having the moment sat where it is currently is pointless so any suggestions welcome

Thank you

jamei305

What is the interest rate and term on your mortgage? If it's 1.45% with 25 years to go then option b would seem best, but if it's 5.99% with five years to go you might prefer option a.

Alexland

Yes the interest rate is the key consideration. Also consider if you would be comfortable investing £100k in one go. If the market suddenly dropped would you kick yourself for the unfortunate timing? If inexperienced with investments you may prefer to clear the mortgage and then drip feed new money into investments to build up your confidence gradually with an increasing valuation. Still it could take years to build up £100k from income and then the market could crash the next day.

Alex

capital0ne

If you can ido without the £100k for 5+ years and don't need it invest the lot.

But it also depends on what you're investing for.

ententecordiale

Thanks all I will have a look at the mortgage rates

I think I could probably invest a large portion for 5yrs

MaxiRobriguez

You might need longer than 5 years if you end up investing now as we're due a sustained downturn at one point.

Cash is cheap to hold at the moment and paying off the mortgage is an 'investment' that at least keeps up with inflation.

You're in a fortunate position whereby any answer is a good answer so long as it's planned.