Strategy for the next 8 - 12 months

StewedApple

https://forums.moneysavingexpert.com/discussion/comment/82119724#Comment_82119724

Apologies if I bang on about it, I registered about 10 years ago when I heard horror stories about people returning from working abroad to find their house "sold" to someone else i.e. identity theft.

My experience:- nothing at all for ten years then last year a notice that a mortgage on my property for £150k was being registered. When challenged by me the Land Registry investigated and discovered the mortgage was for property with same property number, same street, different town, similar postcode.

My assumption is that the solicitors responsible picked property from PAF file drop-down menu and accidentally picked the wrong property (the other possibility I can think of is organised mortgage fraud, but that's for the Land Registry).

If I hadn't registered for this free service, no-one would've noticed until the lender defaulted or I attempted to get credit elsewhere.

Many people don't realise that whilst they have a mortgage there is a degree of protection (because the lender has a first charge, and has to be notified of any other charges being registered, which means they may contact you because of a breach of agreement), but once your mortgage is repaid paradoxically you become more vulnerable to fraud.

It costs nothing to register and every year you'll get an email saying no activity this year (hopefully).

Yorkie1

No apologies needed! One bonus I have learned is that, when I pay off the mortgage, I should get an alert confirming that NWide have removed their charge. It's a useful way to diarise to check they've done it.

I've set up an alert for my mum's house too!

Yorkie1

https://forums.moneysavingexpert.com/discussion/comment/82119548#Comment_82119548

OK, I think I have a plan. Many thanks to all who have offered thoughts.

1. Roll over the imminently maturing £21K for 18M at 4.9%. This will mature in Mar 2028 (seems so far away!), ready for investing into cash / S&S ISA in TY 2028-29 (which seems even further away!)
2. Pay off mortgage in the next month or so from other cash.
3. That will free up the mortgage overpayment monthly amount - which I need to place elsewhere
4. Use the funds maturing over the next 6 - 12 months for the TY 27-28 cash / S&S ISAs

I take your point, @masonic about forgetting that salary income has already been taxed before it then generates interest, which is itself taxed. But that payments to pension are pre-tax. Therefore payments into pension beat those into savings, all else being equal.

I'd prefer not to put too much from existing savings into pension as well, as I may need quite a bit of it for house projects; I'm OK with it taking a couple of years from now to shelter it all.

But definitely I could put the money from no longer overpaying the mortgage into my AVC (seems easier to keep it together rather than starting a new SIPP). This also means existing taxable savings don't increase further from that spare money. And I will look at moving a bit more into the AVC too.

No need to decide right now which funds to rely upon to bridge the gap between part 1 and part 2 of my pension. Although as the beneficiary/ies of the AVCs live in Europe, it might be most straightforward to have used up all the AVCs while alive, to prevent the pension / IHT calculations being even more complex owing to overseas issues.

masonic

The only reason to start a new SIPP is if your investment choice is too limited in your AVC account, or if you were planning to use a strategy like a gilt ladder for the bridge. I'm not familiar enough with your pension plan to know if you make contributions via salary sacrifice, but if so there would also be a saving in NI making AVCs vs paying into a SIPP post tax.

But I think based on what you've said above, you should look to fund the bridge from your AVCs rather than ISAs, which means you won't have a dilemma about whether to hold additional low-risk assets in your S&S ISA as provision for that.

Yorkie1

Thanks @masonic for spending your Sunday helping me to think this through. I really do appreciate it. 😇

masonic

No problem. One final thing to consider, as you mentioned being invested in a lifestyle fund, is that this will shift you into long-dated bonds as you approach the target date, which is exactly what you'd want for an annuity purchase. However, for the money to be used for the bridge, you'd ideally want short-dated bonds to guard against interest rate rises (which we saw the effects of from 2022 onward).

Yorkie1

Ah right yes. I won't be looking at an annuity - the DBs and SP will be sufficient.

I must confess I don't understand short-dated bonds as part of the mix. Would moving the funds into a later target lifestyle date (say 15 years later) have an adequate effect?

masonic

https://forums.moneysavingexpert.com/discussion/comment/82120044#Comment_82120044

That would be the way to fudge it, yes. Keep the date well into the future so that the fund stays invested mostly in equities. But if you have the choice of other static investments, you could move over to something more like your S&S ISA fund where you can control the amount of risk, and even potentially split the money between risky and safe pots based on those future needs.

Tommaso46

I think we may be heading for a crash caused by the incredible levels of borrowing to fund the AI bubble, which will burst. So I am staying away from fixed rates for the foreseable future.

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/82124610#Comment_82124610

Interesting. How would that play out in your eyes then? Previously, when there was a (significant enough) crash such that the economy is affected, central banks have cut interest rates, meaning previous fixed rates are now very valuable. Perhaps there's a particular type of fixed rate you're thinking of?