We recently received some money from a house sale. We have paid off all of our debts apart for one of £25k which is tied to our mortgage (and on the same interest rates). We now have about £35k left. We don't have any savings and we would like to make sure that we make the most of the money in terms of doing something for the future but because of our lack of savings I feel that we should put it somewhere where we can use it in an emergency. My partner would like to put it into Premium Bonds for that reason and pay off the remaining debt. I heard somewhere that its always best to pay off the mortgage first if at all possible. We have a huge mortgage but it is on flexible terms - if we overpay we can draw down on the overpayment so arguably it would be no different to putting it into a savings account in terms of access. Grateful for any ideas.
2006-07-19 21:57:18 · 12 answers · asked by babyalmie 3 in Business & Finance ➔ Personal Finance
Saving vs. debt options have to be weighed in terms of interest rates. Will you make enough money on an investment to cover your mortgage payments. If the money you could be earning is more than the mortgage payments for the duration of the investment, go for the investment.
The second thing you have to look at is the amount of payment you could reduce by paying more into the mortgage. For some, there's penalty for doing this. For others, there is not. But, it's usually the interest accrual that plays the big part.
Ultimately, though, for you you need a rainy day fund as you're without savings of any kind.
If it were I, I would take half and reduce the mortgage debt and take the other half and invest it into money market or AAA bonds because both of them need attention.
2006-07-19 22:08:51 · answer #1 · answered by Nikki W 3 · 3⤊ 1⤋
The first an obvious answer is to seek the advice of an independent financial adviser.
It is nearly always better to pay off your mortgage early, even if there is a penalty for doing so. The penalty is generally a lot less than the interest the bank would make off you in the long term.
There are a number of good Internet easy access accounts where you can put the balance, e.g. ING, ICICIBANK, etc. The financial pages in The Daily Express on a Wednesday give you a guideline, and, in turn, their information comes from moneysupermarket.com, so you could look there.
Get some ideas of your own, so you have an idea what is out there, and then seek the guidance of a financial adviser.
2006-07-19 22:04:09 · answer #2 · answered by Colin S 3 · 0⤊ 0⤋
I'd be inlcined to put say £10k away in a savings account for a rainy day, you'r not likely to need more than that in an emergency, and stick the rest off the mortgage. Personally I'm trying my hardest to get the mortgage paid off as soon as possible, it's a chain around my neck I could really do without!
2006-07-19 22:05:38 · answer #3 · answered by K38 4 · 0⤊ 0⤋
It depends on where you are in your life. Do you have kids? Are you going to have kids? Do you need to think about college for them? If you don't look forward towards your retirement. I'm guessing that you're British (the pounds thing) so I'm not sure about the mortgage question. In the US having a mortgage is a huge tax writeoff so you don't want to really monkey with that if you can afford it. Be very conservative, and be very careful. Money goes really easily, and it's scary to not get it back. Go to an investment specialist
2006-07-19 22:08:09 · answer #4 · answered by Sidoney 5 · 0⤊ 0⤋
It would be a good idea to spend a little on a financial adviser's fee! He/she will be able to tell you what to do taking into consideration the fact that there are ways in which you won't get taxed as opposed to others, also lesser tax etc. Try that first. OK It'll cost you a little but these people are fabulous and will know far more about maiing your money work than anyone else!
Enjoy!
2006-07-19 22:04:42 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I am a mortgage broker and you really want to refinace and pull out your equity about every 3 years to do improvements and pay off credit cards etc...Find something to invest some of the money into there are some really good stocks out there good luck
2006-07-19 22:03:10 · answer #6 · answered by karlyk721 3 · 0⤊ 0⤋
bricks and mortor, get the house paid off as soon as you can (long term its the best answer) you'll save on intrest rates in the long run
forget savings get yiour debts paid off then your money is your own
if you put it aside for emergency it'll slowly fritter away and you'll still have the house to pay off
2006-07-19 22:06:02 · answer #7 · answered by rompa_stompauk 2 · 0⤊ 0⤋
Personally i would leave the cash in the bank and wait for the share market to crash, but dont know when that will be. Then i 'll buy the cheaper bank shares and double my money in a few months..29?
2006-07-19 23:07:04 · answer #8 · answered by chp 2 · 0⤊ 0⤋
Open up a load of ISA money owed, and watch the extreme activity are available :D. yet i visit furnish you with a warning, given the present "crunch" they'd no longer provide activity as extreme as they used to.
2016-10-08 03:01:41 · answer #9 · answered by ? 4 · 0⤊ 0⤋
1 Pay off your mortgage
2 Do something you have always wanted to do and you will always remember a benefit from having the windfall.
Any order you chose
2006-07-19 22:12:09 · answer #10 · answered by Anonymous · 0⤊ 0⤋