Savings Advice - £130k

Albermarle

jplayy said:

No recommendations on a buy to let? Re stocks and shares how would you advise going about this? Any thoughts on Nutmeg?

Nutmeg is a robo advisor. It means they will ask you some questions and guide you towards a suitable investment fund . It is the most basic form of financial advice. The downside is that their charges are not that competitive , but for smaller amounts that is less of an issue. Can be a good starting point for inexperienced investors. Ideally best to get better informed yourself though.
Also do not forget that your pension is also invested , so you need to be aware of how that is invested . Especially if you put more money in it , as suggested in posts above.
BTL is less attractive than it used to be due to changes in the tax regime. Also can be a big hassle if you have problems with the property/tenants. It is best suited to experienced landlords/ people involved in the building/maintenance trades.

redpete

jplayy said:

I've also been looking into Nutmeg but with a "moderate" willing for risk, the returns don't really seem to be worth the effort.

Nutmeg gives you a pre-determined diverse set of funds that they select based on your profile, they automatically rebalance the investments for you.  The amount of effort required from you is minimal.  As said above, they are not as cheap as others.
An alternative could be to use a single global multi-asset tracker on a cheaper platform, this would probably get similar returns with the same (little) effort required from you.
Either of these should be considered long-term investments.  (But I agree with others, you are making very small contributions to a pension at the moment and this should be seriously looked at.) 

Alexland

jplayy said:

No recommendations on a buy to let? Re stocks and shares how would you advise going about this? Any thoughts on Nutmeg?

I still don't understand why you are only going with a 10% deposit on the property purchase? Have you done the maths on how having a better LTV should give you access to a lower interest rate across all the debt? For example if an extra 5% deposit (£27.5k) saves 0.25% on the 85% debt (£467.5k) it would be worth £1,168.75 which is a 4.25% return plus maybe 1.5% saved on not having borrowed as much giving an overall 5.75% return with no risk. Just rough numbers. Also as mentioned earlier it's also worth making substantially higher pension contributions.

lozzy1965

I wouldn't, and most people on here wouldn't recommend buy-to-let.  It's not the passive income generator people think it is.
I would:  Increase your deposit to get the lower mortgage rate.  Up your pension payments to use all, or as much as possible, of your higher rate tax salary.  Work toward getting 50K in premium bonds as your emergency funds.

jimjames

jplayy said:

MaxiRobriguez said:

jplayy said:

Future plans - I'll be moving into a rental property around April. Probably be looking at buying a house in 2023 c.£550k with a 10% deposit. 

Unless you are buying with a partner or friend who earns at least £40k, you're not going to be offered a mortgage on those figures. 

Yep that's exactly what I'm doing (partner). Nationwide would offer 2 year fixed 1.49% for 10% deposit, 1.09% for 20% deposit. Difference of £230 per month.

In which case why aren't you doing that? What are the 5 year fix rates like for 20%? I can see rates going up so a 5 year will give certainty

steampowered

Alexland said:

I still don't understand why you are only going with a 10% deposit on the property purchase? Have you done the maths on how having a better LTV should give you access to a lower interest rate across all the debt? For example if an extra 5% deposit (£27.5k) saves 0.25% on the 85% debt (£467.5k) it would be worth £1,168.75 which is a 4.25% return plus maybe 1.5% saved on not having borrowed as much giving an overall 5.75% return with no risk. Just rough numbers. Also as mentioned earlier it's also worth making substantially higher pension contributions.

Exactly this. Although the 90% mortgage still sounds very competitive, compared with the 80% mortgage, Op is still paying an extra 0.5% of interest on £510k of debt.

Op -  that's an additional extra £2,750 per year in interest which under the 90% mortgage you are paying to the bank unnecessarily. 

If you do still decide to go with the larger mortgage, consider opening a Stocks & Shares ISA and just investing it simple in a Vanguard global fund, such as the VLS 100. You don't need to pay Nutmeg's higher fees.

Also ensure that you are building up a pension - an 8% contribution (employer/employee) is the bare minimum if you want to be able to retire ever; increasing above that is a good idea if you might want to retire before age 65 (while taking advantage of the 40% tax relief on your contributions).