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Is investing mortgage monies wise?

deaf-ears
by deaf-ears 09 September 2012  |  Comments 2 comments  |  Love Love  0 loves

My £62k interest only mortgage deal with LloydsTSB/C&G ends in January 2013 resulting in a payment increase from £40 per month (0.76% lifetime tracker) to £139 (2.5% SVR). I have the 62k to pay off the mortgage but it seems to me that 2.5% is cheap money so would it be beneficial to use this money elsewhere I.e. buy to let, invest, savings account, social leading. I know the safe thing to do is to pay off the mortgage. Opinions appreciated. Thanks Mark.

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Comments (2)

  • MikeGG1
    Love rating 879
    MikeGG1 posted

    The problem with SVR is that it can change rapidly if the economic climate changes. That isn't really a problem if you can repay quickly but if you are limited to 10% of outstanding mortgage in any one year, you might get stuck with a negative balance.

    If you are able to repay quickly then it might be a good idea to reinvest some, or all, of the money. However, I would not recommend Buy to Let unless you have a substantial amount of other money/invstments. It is not a good idea to put all your eggs in the property market. Firstly, it is high risk to invest all in one sector and secondly there is a good chance of another dip in the property market, especially away from London and the SE.

    A spread of investments would be safer.

    Mike

    Posted on 09 September 2012 | Love Love  0 loves Report
  • deaf-ears
    Love rating 0
    deaf-ears posted

    Thanks very much for your advice Mike. I hadn't considered that I may be limited to 10% of the outstanding mortgage if don't pay it off and it moves to SVR so i'll seek advice from LloydsTSB on that one.

    I have about 26k in cash ISA's and 70k in a spread of stocks & shares ISA's through an independant advisor so really not paying off the mortgage and using the 62k somewhere else is not a necessity but a nice to do (i.e. if i could squeeze a little interest over the 2.5% the mortage would cost me I'd be happy).

    Posted on 10 September 2012 | Love Love  0 loves Report

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