Keep mortgage or cash?
2:08 PM, 8th August 2022, 4 years ago
17
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Hi everyone, I have a £100k cash fund in the bank and it is losing 10% ( ?) pa due to inflation. I also have a Buy to Let interest only mortgage in my personal name on a single-let apartment costing 4% on Sonia standard variable rate term and rising.
This mortgage is due for redemption in 2 years.
Should I use the cash in the bank held fund to pay off the mortgage and keep the property or keep a contingency fund in place?
Any thoughts would be appreciated.
regards
Ken
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Member Since December 2021 - Comments: 8
2:45 PM, 8th August 2022, About 4 years ago
I think invest your cash into a stocks and shares ISA
You can get around 8% in a vanguard tracker
Don’t pay off your BTL mortgage you will get a tax credit so it’s not tax effect to pay off
Member Since March 2022 - Comments: 142
2:58 PM, 8th August 2022, About 4 years ago
I would switch the mortgage to a 5 year fixed now before the new rates kick in September. Use any spare case to buy further BTL’s.
Member Since June 2022 - Comments: 111
3:11 PM, 8th August 2022, About 4 years ago
Reply to the comment left by Jason English at 08/08/2022 – 14:58
I agree… But If Ken didn’t want to buy another BTL he could pay his mortgage off and use the extra profit to build up a contingency fund.
Member Since August 2018 - Comments: 3
3:27 PM, 8th August 2022, About 4 years ago
Reply to the comment left by Jason English at 08/08/2022 – 14:58
i agree, switch to another lender now secure a 5year fix deal. buy another BTL using some of your savings. your money invested will give you a better return also capital appreciation.
the new property you will buy will be in a company name to gain max benefit. fix the new one on 5 year deal too.
as rental market is on fire, both properties will give you good rental return n income. in 5 years time your property will be worth a lot more than what it is today.
Member Since April 2019 - Comments: 59
6:22 PM, 8th August 2022, About 4 years ago
It depends on how old you are, whether you need to diversify, attitude to risk etc.
Can you make more with a fund ( a simple all world tracker ETF from Vanguard for instance) than the interest rate (- the 20% offsettable). You put the £100k on a general investment account and buy the above then transfer £20K pa to your Stocks and shares ISA or use wife’s.
If you pay 4% (3.2 net) but reckon you can get 5-6% p.a growth from you ISA then maybe the ISA. Then use that to pay off your mortgage further down the line.
Member Since January 2020 - Comments: 1102 - Articles: 1
7:15 PM, 8th August 2022, About 4 years ago
Reply to the comment left by geester24 at 08/08/2022 – 18:22
Appetite for risk is key in this situation. Tracker funds are all very well but are not guaranteed to maintain their value let alone provide a positive return and if you have cash reserves which you are going to need to pay off mortgages or other debts it is perfectly acceptable to keep the cash in a savings account or premium bonds where the capital is not at risk.
Member Since December 2021 - Comments: 8
6:03 AM, 9th August 2022, About 4 years ago
Reply to the comment left by Seething Landlord at 08/08/2022 – 19:15
I think if your investing long term a bit of risk can work well
Member Since January 2016 - Comments: 299 - Articles: 1
6:56 AM, 9th August 2022, About 4 years ago
Please tell me if interest rates will go above CPI?
Then I will tell you if it is better to borrow or pay off debt.
Member Since December 2013 - Comments: 13
8:14 PM, 9th August 2022, About 4 years ago
So stocks and shares isa will give u 8% a year and btl will see big gains in 5 years.. oh dear still living last ten years arent we.
Member Since January 2016 - Comments: 299 - Articles: 1
11:24 AM, 10th August 2022, About 4 years ago
Reply to the comment left by Elaine Landlord at 08/08/2022 – 14:45
8% in a vanguard tracker
very good
havent seen anything like that since Bernie Maydorf went up the river!