what to do with 60k

Bobziz

surely whether you pay off debt or not should be determined, or at least informed by what level of interest you're paying on it ?

Mickey666

You haven’t really got £60k have you.  You’ve effectively borrowed a mortgage and put £60k of it in the bank.  You’re actually in debt.  Also, as mentioned above what are the respective interest rates?  I bet you’re losing money on this arrangement.  I’d pay off the mortgage . . . In fact I did and can’t remember what it’s like to pay out all that interest every month  

kinger101

coachman12 said:

Some differing views on what the O/P should do. From the usual quarter it has to "do something clever" and don't invest in property. From the simple "don't let's get smart and wordy" posters like me it's a simple "pay off your mortgage". The sheer relief and peace of mind, instead of tinkering around with investments that could be losers, makes paying off the mortgage the sort of straightforward advice that should be at the heart of these Forums instead of the advice from folk who just like making up long complicated permutations just because they like the sound of their own voices and care little for the O/P, if indeed they remember his original post at all. It's seen so often on these Forums, and usually by the same people.

Are you capable of making a point without directing insults at other people? 
I apologize if this is too wordy for you, but if life is a balance sheet, then as well as the mortgage, there's another massive liability sitting there called retirement provision.  So "doing something clever" to ensure this liability is met in the most cost-effective manner is very sensible thing to do.  Sticking more into an employer's scheme for example is hardly complicated.  It's certainly easier than running a BTL. 

Mickey666

Yes, nothing wrong with some differing views.

However, would those offering advice on how to invest 60k instead of paying off the OPs mortgage also suggest that those of us who are mortgage-free should borrow £60k by taking out a mortgage on their home so that they could also follow the same investment advice?

After all, that would be the logical conclusion of their advice.

barnstar2077

Mickey666 said:

You haven’t really got £60k have you.  You’ve effectively borrowed a mortgage and put £60k of it in the bank.  You’re actually in debt.  Also, as mentioned above what are the respective interest rates?  I bet you’re losing money on this arrangement.  I’d pay off the mortgage . . . In fact I did and can’t remember what it’s like to pay out all that interest every month  

The point is that mortgage rates are good at the moment.  Paying money into your pension immediately gives you a 25% uplift (within a month or so.)  So if you have a good emergency fund then from a pure numbers point of view then putting at least some of the money into a pension is the right thing to do.  But that doesn't mean it is the right decision for everyone, or that it will definitely work out.  We are just giving the OP some ideas, which I believe is what they came here for,

Mickey666

So you WOULD suggest taking out a mortgage to fund pension contributions in some circumstances?

barnstar2077

Mickey666 said:

So you WOULD suggest taking out a mortgage to fund pension contributions in some circumstances?

I have thought about doing this myself.  While still in employment, but near to retirement you could increase your mortgage and pay it into your pension, splitting the money over a couple of years to make the amount worth doing.  You borrow x amount at 2% or less for a couple of years and make 25% on it.  You then use your tax free lump sum to pay back the mortgage.  It is effectively what I am doing already though.  By increasing my mortgage term I am effectively borrowing more money than I did initially.  Am I doing the right thing?  Ask me again in twenty years :  )  

kinger101

Mickey666 said:

Yes, nothing wrong with some differing views.

However, would those offering advice on how to invest 60k instead of paying off the OPs mortgage also suggest that those of us who are mortgage-free should borrow £60k by taking out a mortgage on their home so that they could also follow the same investment advice?

After all, that would be the logical conclusion of their advice.

It's not a logical conclusion at all.  For one, there is the cost of arranging mortgage finance. But every year a considerable number of people who made inadequate retirement provision have to do just that via equity release.  

My mortgage rate is currently 0.89% interest.   At the moment, anything I put into my pension gets either a 41.67%, 46.55% or 77.08% instant uplift depending on the various timing aspects related to tax and NI.  So if I've extra money lying around, it will go into my pension.

I'd rather be in a position where I use pension equity to pay off mortgage debt than home equity to provide pension income.

coachman12

kinger101 said:

Mickey666 said:

Yes, nothing wrong with some differing views.

However, would those offering advice on how to invest 60k instead of paying off the OPs mortgage also suggest that those of us who are mortgage-free should borrow £60k by taking out a mortgage on their home so that they could also follow the same investment advice?

After all, that would be the logical conclusion of their advice.

It's not a logical conclusion at all.  For one, there is the cost of arranging mortgage finance. But every year a considerable number of people who made inadequate retirement provision have to do just that via equity release.  

My mortgage rate is currently 0.89% interest.   At the moment, anything I put into my pension gets either a 41.67%, 46.55% or 77.08% instant uplift depending on the various timing aspects related to tax and NI.  So if I've extra money lying around, it will go into my pension.

I'd rather be in a position where I use pension equity to pay off mortgage debt than home equity to provide pension income.

It's OK , Mickey, in spite of your logical conclusion, just listen to what the previous  poster tells you to do----it is expected of you on these Forums.

Mickey666

kinger101 said:

I'd rather be in a position where I use pension equity to pay off mortgage debt than home equity to provide pension income.

I'd rather be in neither position and fortunately I'm not. 

But it raises an interesting point about home equity.  I tend towards the view that any money I die with is money I might just as well have never had in the first place.  Homes, however, are a rather unique asset in the sense that we all need somewhere to live so anyone owing their own home will have a significant sum tied up in it.  So what's so bad about home equity loans if they mean a more comfortable and fulfilling retirement?

My feeling is that many of these sorts of issues are not simply a question of maths, there has to be a 'philosophy of life' angle to them as well.  As an example, early retirement is probably a bad life-choice if the objective is to accumulate as much wealth as possible, so why do so many people do it?  I'd suggest it's because life is not all about money and there must surely come a time when enough is enough.  I guess we all have different definitions of 'enough' but I've seen people put lifetime ambitions on hold because they're too busy working when they could financially retire tomorrow and go out and fulfill those ambitions.  It takes all sorts I suppose.