Drip feed or lump dividend payments?

[northernladuk]

Stick in in premium bonds.... You never know....

[WTFH]

The money needs to be liquid, as I will live off it for the year. Putting it into a mortgage, or a BTL property will not allow me to do this unfortunately.

Get an offset mortgage.

[WordIsBond]

Get an offset mortgage.

My thought exactly. If you have a mortgage, get an offset mortgage and use it to lower your mortgage interest.

If you are mortgage free, probably just get the best savings interest you can. You might consider locking up part of it in some kind of notice account, if you can get better interest that way, and take some of it out every three months or so.

[WTFH]

My thought exactly. If you have a mortgage, get an offset mortgage and use it to lower your mortgage interest.

If you are mortgage free, probably just get the best savings interest you can. You might consider locking up part of it in some kind of notice account, if you can get better interest that way, and take some of it out every three months or so.

So, I took out a 20 year mortgage of over £300k 6 years ago with an offset. First couple of years we were spending a lot on the house so the offset was almost like a current account. It's now growing and my plan is to be mortgage free in 4 more years. That will save me around £45k in interest on the mortgage and mean that I don't have almost £2k per month going out to pay it, i.e. my financial burden will drop, allowing me to save more.
It's also a good warchest.


And finally, it means that if something happens to me that leaves my wife as the sole source of income, she is not left with trying to find the money to pay bills from her pay.


If you are someone with a partner or children, you need to consider them and how they would survive if you died. It's not just about you and your dream of having a million pounds. You have to think of your dependants too. If you believe you're going to live long enough to service all your loans, then ignore this. Also ignore it if you don't care about anyone else.

[jmo21]

You may be correct based on today's interest rates.
Do your same comparison on, say £250k mortgage at 2% interest and a £250k mortgage at 5% interest.


If someone said that interest rates would stay at 2% or lower for the next 20 years, I'd agree that paying off debt is maybe not the thing to do. Anyone with any financial skills will tell you that it is highly unlikely the rate will stay that low for much longer.

So when the interest rate changes, change the approach.

When the mortgage rate interest rate is higher than the available savings rate, pay off more (keeping your own personal liquidity needs in mind of course)

Martin Lewis has a good piece on it:
Clear debts or save? Max your cash - MoneySavingExpert

[WTFH]

So when the interest rate changes, change the approach.

I intend to! But I'm hoping that my mortgage will be far lower than it currently is when that happens.


Interest rates go up, I start putting more money into savings.
Interest rates stay low, I keep paying off debts first.


At the end of the day, it's not just about me, but about those who rely on me as well. Planning for the future isn't just about having "investments", but reducing debt.

[northernladuk]

The problem is many off the offset mortgages are running around 4% at the moment and the conditions attached about having your current account with the same providor do make them a bit restrictive. I've just given up my offset as the lower rate on the new one and other investment opportunities were going to beat having the offset. Have to either do your sums in detail or pick the one that suits your lifestyle. It's not as straight forward as it used to be due to the tiny percentages.

[diseasex]

I intend to! But I'm hoping that my mortgage will be far lower than it currently is when that happens.


Interest rates go up, I start putting more money into savings.
Interest rates stay low, I keep paying off debts first.


At the end of the day, it's not just about me, but about those who rely on me as well. Planning for the future isn't just about having "investments", but reducing debt.

its not when interest go up or down you make these adjustments. The real question is can you make your money work for you better than putting it against the debt?
Santander 123 current account is simple answer for 2% mortgage. But that can be 10% bonds too.
If your mortgage is at 4% then obviously repaying it would make more sense.

However if you can put your money into some investment , be it ebay , bonds or whatever then you are better off do it this way if you know what are you doing.

[northernladuk]

Just to put this back in to perspective of the OP's question.

If someone who can't work out the financial implications of whether to withdraw 30k and invest it or leave it in an account paying less than1% for most of the year won't all this is a little out of his league? Has he got the basics Aldermore high interest accounts with his CT invested in it and the like. Lot's of things he might need to look at before taking decisions on what investments might make him a couple of percent here and there.

I'd say he's not using his accountant properly either. They should be flagging this and offering alternatives in his quarterly/yearly review even though they can't give financial advice?

[WTFH]

The real question is can you make your money work for you better than putting it against the debt?

However if you can put your money into some investment , be it ebay , bonds or whatever then you are better off do it this way

Not as simple as that.
How flexible is your cash? How quickly can you get at it? What are the timescales to make the return levels you are talking about? Do you still get the returns if you need the cash quickly?


Investing while you have debt is NOT always the best answer. The only people who tell you that are making a % from you investing with them.