Would you take this mortgage offer and invest the fund (250K 5 year-fixed rate 1.54%)

thegentleway

Albermarle said:

As above to go all in with £250K could be rather nerve wracking.

Tell me about it  when I faced that decision, the IFA I spoke to suggested putting it into the market in 3 tranches. Presumably as psycological trick to make it less daunting/nerve wracking. 

HCIMbtw

If the sum were lower, and I could get it all into an ISA over the next few years, I'd do it

But with that type of money it doesn't seem worth the risk of loss considering the upside would be subject to tax 

If I wanted the cash available for buying a property though.. I would take it out, because I can only see short term cooling in the property market and this might present some a nice buy opportunity. 

ringding

@IamWood What have you decided? 
I certainly wouldn't be brave enough to invest it, but as you know I'm using fixed savings for ours. There's some faff to get it set up across different banking providers (to be covered if the bank fails) but even accepting having to pay tax then it's was still financially worth it (come back and check with me again in 5yrs to see if I was right or not!  ).

IamWood

@ringding

Mrs doesn't like it but I would like to try it. Update by Monday I would also like to put them in savings if I do accept the offer.

My monthly mortgage payment is around £1200 per month which could be invested if I don't have a mortgage though.

kidmugsy

IamWood said:

redpete said:

Another disadvantage:

- Your circumstances might change and you might want / need to sell the current property, so even fixed term savings could give you a problem.

Thanks

It's possible as my family did talk about to sell my current house and purchase a bigger property near London instead, when my second boy goes to university in 2 years. However I should be able to take the mortgage with me and it works for my advantage in this case I guess.

If you are old enough for a second son to be about 16, are you old enough to become 55 in the next 5 years?  If so you could try putting some of the money into a pension each year, with a view to eventually withdrawing the tax-free lump sum at a suitable point to let you reduce the debt.  If you can contribute by salary sacrifice this might be a particularly attractive gamble. 

Just at the moment Leeds BS are offering a 2.5 year cash ISA paying 2.75%.  In addition to ISAs you might also use Premium Bonds - the winnings are tax-free and the capital will be available almost instantly.

IamWood

@kidmugsy. Thanks

Unfortunately (or fortunately)I have already maximize my annual pension contributions through my salary sacrifice.

I'll be 52 in 5 years.

The last day to decide:). 

Linton

It sounds a lot of hassle for very little return. After costs/tax the profit would be, I guess,1-2 months pay.

What happens if in 5 years time mortgage rates have increased to say 5%?