My Financial Setup

Cptralls

Hi All,

I have seen a few other posts like this on here and I was wondering looking for some feedback/recommendations on my financial setup.
Basically I have just got married and my wife and I have that paid off. In July we are expecting our first child and we are looking to move house to a more family sized home come 2021, I want to maximise my money as much as possible to ensure that it's easy to access and that the Regular Savers are 

My Savings - 
HSBC Current Account - £2000
HSBC Regular Saver - £2000 - 5%
Nationwide Regular Saver - £2750 - 5%
First Direct ISA - £3500 - 0.55%
First Direct Regular Saver - £2400 - 5%
M&S Regular Saver - £2000 - 5%
TSB - £1700 - 3%
Premium Bonds - £200
Funding Circle - £200
I am also due £15000 from a delayed redundancy payment which should be concluded by June 2020.
Property
Bought £207k - Mortgage Remaining £83k - 2% interest, location makes it unsuitable for our family home, renting this out for £850 pm, mortgage is £754 pm.
Pension
£45k - I am 36.

My wife has also got her own property, valued at £110k with £65k left on the mortgage and 5k in savings. We are looking to sell her house and continue renting mine out with the aim of buying a new house in the region of £200k £225k.
We both earn 32k pa.
Combined month expenses are £450

Any advice or recommendations would be appreciated.

DiggerUK

You need to concentrate on killing as much of  the mortgage debt as you can.

The rental is a project you don't need, especially when you want to purchase. Get a fighting fund together for that one project and put all efforts in to being mortgage free ASAP. Then you will have a secure asset for life, and one thing you can base a sound future on. That future is a secure roof over your head..._

Mr.Saver

DiggerUK said:

You need to concentrate on killing as much of  the mortgage debt as you can.

If OP is selling the house in a year, I don't see the early repayment on the mortgage being very beneficial. In addition to that, at 2% interest, it would be silly to repay it from the money earning 5% interests from regular saves.

Mr.Saver

A few observations:
You have 2000 sitting in the HSBC current account earning nothing, you should consider open an easy access savings account
£45k pension pot for a 36 years old is fairly small, you should consider top it up
The First Direct ISA interest rate is very low, you should consider transfer it
There's no point keeping £200 in premium bonds, you should consider move them to somewhere else with a decent interest rate.
Why do you have £200 in Funding Circle? You should consider an S&S ISA if you want to invest.
If you don't need some of your money in the next 5-10 years, maybe you should consider invest some of it?
Regular saver's rate is dropping soon, and easy access savings account's interest rates are so low. Do you consider fixed term savings accounts?

JPin

Mr.Saver said:

DiggerUK said:

You need to concentrate on killing as much of  the mortgage debt as you can.

If OP is selling the house in a year, I don't see the early repayment on the mortgage being very beneficial. In addition to that, at 2% interest, it would be silly to repay it from the money earning 5% interests from regular saves.

Think the OP is keeping their house and selling the wifes. £30k savings isn't bad.... 

Cptralls

Mr.Saver said:

DiggerUK said:

You need to concentrate on killing as much of  the mortgage debt as you can.

If OP is selling the house in a year, I don't see the early repayment on the mortgage being very beneficial. In addition to that, at 2% interest, it would be silly to repay it from the money earning 5% interests from regular saves.

We were hoping to keep my house sell my wife's house. 

Mr.Saver

Cptralls said:

Mr.Saver said:

DiggerUK said:

You need to concentrate on killing as much of  the mortgage debt as you can.

If OP is selling the house in a year, I don't see the early repayment on the mortgage being very beneficial. In addition to that, at 2% interest, it would be silly to repay it from the money earning 5% interests from regular saves.

We were hoping to keep my house sell my wife's house. 

Sorry, I missed that part.
I wouldn't be too worried about the mortgage repayment risk. Because mortgages are now heavily regulated, the banks must do risk assessment before lending to you, and they will only lend to you if they believe a raising interest rate will not cause you to default on the mortgage. Although, that may not work in your favour on your new house purchase, because your existing mortgage will affect your affordability for a new mortgage. You may want to talk to a mortgage broker and see how much does this affect you.

For your overall finance, you are heavily invested in real estates, because you have a net worth of roughly £185.75k, consist of cash -£66.45k (-35.8%), UK real estate £207k (111.4%), and diversified asset classes £45.2k (24.3%). I would refrain from adding one more house to this portfolio. To you, UK house price crash is a much bigger threat than a rising interest rate or a stock market crash.

Cptralls

Mr.Saver said:

Cptralls said:

Mr.Saver said:

DiggerUK said:

You need to concentrate on killing as much of  the mortgage debt as you can.

If OP is selling the house in a year, I don't see the early repayment on the mortgage being very beneficial. In addition to that, at 2% interest, it would be silly to repay it from the money earning 5% interests from regular saves.

We were hoping to keep my house sell my wife's house. 

Sorry, I missed that part.
I wouldn't be too worried about the mortgage repayment risk. Because mortgages are now heavily regulated, the banks must do risk assessment before lending to you, and they will only lend to you if they believe a raising interest rate will not cause you to default on the mortgage. Although, that may not work in your favour on your new house purchase, because your existing mortgage will affect your affordability for a new mortgage. You may want to talk to a mortgage broker and see how much does this affect you.

For your overall finance, you are heavily invested in real estates, because you have a net worth of roughly £185.75k, consist of cash -£66.45k (-35.8%), UK real estate £207k (111.4%), and diversified asset classes £45.2k (24.3%). I would refrain from adding one more house to this portfolio. To you, UK house price crash is a much bigger threat than a rising interest rate or a stock market crash.

It's hard to know what to do, the second house was to be an early retirement plan. 

onwards&upwards

Cptralls said:

Hi All,

I have seen a few other posts like this on here and I was wondering looking for some feedback/recommendations on my financial setup.
Basically I have just got married and my wife and I have that paid off. In July we are expecting our first child and we are looking to move house to a more family sized home come 2021, I want to maximise my money as much as possible to ensure that it's easy to access and that the Regular Savers are 

My Savings - 
HSBC Current Account - £2000
HSBC Regular Saver - £2000 - 5%
Nationwide Regular Saver - £2750 - 5%
First Direct ISA - £3500 - 0.55%
First Direct Regular Saver - £2400 - 5%
M&S Regular Saver - £2000 - 5%
TSB - £1700 - 3%
Premium Bonds - £200
Funding Circle - £200
I am also due £15000 from a delayed redundancy payment which should be concluded by June 2020.
Property
Bought £207k - Mortgage Remaining £83k - 2% interest, location makes it unsuitable for our family home, renting this out for £850 pm, mortgage is £754 pm.
Pension
£45k - I am 36.

My wife has also got her own property, valued at £110k with £65k left on the mortgage and 5k in savings. We are looking to sell her house and continue renting mine out with the aim of buying a new house in the region of £200k £225k.
We both earn 32k pa.
Combined month expenses are £450

Any advice or recommendations would be appreciated.

Basic observations at first glance...

Why are you keeping 2k in a current account earning nothing?

ISAs are a bit pointless for most people now the rules for tax on savings interest have changed, yours is paying nothing, so ditch it.

£200 in Premium bonds is not worth having, withdraw it.

Your 5% regular savers are coming to an end and won’t be available again, start doing your research now for the best ones to use in your next saving year.  HSBC, FD and M&S are the highest interest at 2.75%, Coventry are offering 2.5% with a higher monthly limit of £500, and there are a few at 2% that allow unlimited withdrawals without penalty so it makes sense to have enough of them to get most of your money earning interest again ASAP once it is out of the current regular savers. 

TSB only give 3% on balances up to £1500 so don’t keep anymore than that in there, it’s also dropping to 1.5% in May.  That’s not bad for instant access if you don’t mind the faff of transferring £500 in and out every month.  I would suggest getting a Marcus account too at 1.3% where you can stuff anything left over that won’t fit in your regular savers or TSB. 

As you are coming up to 40 (sorry) have you opened a LISA?  Even if you don’t put much in it’s worth having one open for ‘just in case’ while you are still under the age limit. 

What % do you contribute to your pension and what will your employer match?

How much are you adding to your savings each month?

Mr.Saver

Cptralls said:

Mr.Saver said:

Cptralls said:

Mr.Saver said:

DiggerUK said:

You need to concentrate on killing as much of  the mortgage debt as you can.

If OP is selling the house in a year, I don't see the early repayment on the mortgage being very beneficial. In addition to that, at 2% interest, it would be silly to repay it from the money earning 5% interests from regular saves.

We were hoping to keep my house sell my wife's house. 

Sorry, I missed that part.
I wouldn't be too worried about the mortgage repayment risk. Because mortgages are now heavily regulated, the banks must do risk assessment before lending to you, and they will only lend to you if they believe a raising interest rate will not cause you to default on the mortgage. Although, that may not work in your favour on your new house purchase, because your existing mortgage will affect your affordability for a new mortgage. You may want to talk to a mortgage broker and see how much does this affect you.

For your overall finance, you are heavily invested in real estates, because you have a net worth of roughly £185.75k, consist of cash -£66.45k (-35.8%), UK real estate £207k (111.4%), and diversified asset classes £45.2k (24.3%). I would refrain from adding one more house to this portfolio. To you, UK house price crash is a much bigger threat than a rising interest rate or a stock market crash.

It's hard to know what to do, the second house was to be an early retirement plan. 

I don't see a portfolio concentrated in real estates as a good retirement plan. Sure, you might be right, the house market might beat the stock market in the next 50 years. But what if you are wrong? When you are 10 years in retirement and the house market (both rent and house price) crashes, can you actually find a new job after so many years out of the employment market? Will you sell the house during the market low? How long do you think you can live on that money before it runs out? You will need a diversified portfolio to deal with those risks.

colsten

How much is in your wife's pension?

Have you both got life insurance? Critical illness insurance?