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morgage repayment or invest
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Posts: 2 Newbie
I currently have £40,000 in multiple investments.My outstanding morgage is £19,000. Should I pay off the outstanding morgage(which is currently £354 per month at a fixed rate of 4.75% until Oct this year) and invest the remainder or continue to invest the whole capital and continue with my monthly repayments until the completion of the morgage in 2012.
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Comments
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Hi there,
It all dipends on your investments. If they are secured investments well then, you should continue paying your mortgage monthly. In this way you'll have a better credibility with your lender. In the meantime, you could differentiate your investment portfolio to get better returns.
If however your investments are unsecured, and a high percentage of risk is involved, well it will be better off paying out your mortgage as soon as you can.0 -
I would just investigate whether (after tax) you are getting a better interest rate than you are being charged on your mortgage.
When you remortgage in October, review this situation again.
Personally, I would pay off the mortgage (a real goal of mine at the moment) and then reinvest the remainder, adding the mortgage payments you would usually be paying out. Oh, to be free of banks!
Thanks to MSE, I am mortgage free!0 -
THANKS FOR YOUR ADVICE MUCH APPRECIATED.
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With a rate of just 4.75% on your mortgage, you need to be earning 5.9% for basic rate tax, (or 7.9% for a higher rate taxpayer) to make your investments comparable to your mortgage interest rate.
If your return on your investments is better than this, then stick with it until your mortgage rate changes. If your investments are riskier than you're happy with, then if it makes you sleep better at night, pay off the mortgage.:DMember of the first Mortgage Free in 3 challenge, no.19
Balance 19th April '07 = minus £27,640
Balance 1st November '09 = mortgage paid off with £1903 left over. Title deeds are now ours.0 -
From your mtg rate, I would guess you may be on a fixed rate. Therefore, there are likely to be ERC's. Therefore, do not pay-off until the fixed rate ends.
After the fixed rate is finished review return from the investments, versus the new mtg rate. If the mtg rate is higher, then pay it off.In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot:cool:0
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