I do three ways. Overpay mortgage, save into S&S isa and pay into NHS pension. Regardless of mortgage rate, paying it off early thus reducing interest paid is guaranteed. Plus you have the peace of mind of having a secured abode.
We had a different take, hence it is such a personal decision. For religious reasons, we didn't wish to pay interest hence worked to pay off student loans and mortgage. On the side we also invested into ISAs, stocks and shares. Now we're aiming for cash buy property as a side rental income. Maybe it's not the most tax efficient but we felt happier doing things in accordance with our beliefs and values.
A really usual episode! I think it just highlights how personal all the decisions can be. I think it could have been useful to delve deeper into the tax implications! I wonder if anyone on the panel invests beyond ISA allowances for example. The position I've landed on is to invest the full lifetime ISA allowance in order to get the 25% government bonus, and then overpay the mortgage with any remaining income, as the flexibility of having lower outgoings is very powerful for me!
Your videos are always so helpful - thank you! I appreciate what you said about the rate of house price increase not actually being that significant anymore and you might actually gain more investing. I'm debating whether I should hold out buying my first home for a few more years (where I could hopefully afford something a bit nicer) and invest some of the deposit money I had saved up instead. A lot to ponder
Thanks for this. I really enjoyed this. I'm in favor of overpaying but that's because I'm on a 5year fixed rate with a low interest - 1.64, from covid times. I'm hoping to pay as much off before the fixed rate ends.
My offset mortgage allowed me to increase the mortgage due to the increase in equity as want to do an extension. I changed my mind and used the equity for deposit to buy another house ( a little cheeky). Changed to repayment when interest rates low. Going to look at BTL at renewal. Higher rate tax payers would benefit more.
I’m enjoying these videos thanks team overpay mortgage and I’ve been doing it for years. It’s psychological cos I don’t like having the mortgage hanging over me. I work for Defence as a civil servant so doing work in medical sector but there are some similarities I.e. a fairly good public sector pensions
I have to say, I have watched a lot of invest vs overpay mortgage videos on RUclips and this is the absolute BEST! I'm 37, single, part-time NHS locum (paying into NHS pension and ISA) and part-time private (paying into SIPP but stopping SIPP payments from April). I have £350K in SIPP and ISA and currently rent a flat. I'm about to buy a (residential) flat - £155K for 2-bed, 2-bath with balcony (sweet deal!) I'm putting down 25% (which I took out from my ISA) and the interest rate is 4.03% on a 5-year fixed rate. My term is 15 years so I'd be 52 if I don't overpay. My plan re: invest or overpay? To be continued below ...
My current plan is to do a bit of everything. Maxing S&S ISA is a non-negotiable for me because I want the option to retire very early. I can do that whilst still paying into NHS pension and overpaying mortgage a little. My minimum mortgage payment is £861 and I plan to pay £1019 to reduce my term from 15 years to 12 years (if interest rates stay around 4%) as I want to be mortgage-free by 50. I will review this plan in 5 years and see whether I decide to put a chunk onto the mortgage and pay off even sooner. I have enough exposure to humans through my career so I have ZERO desire to buy investment property and have tenants! For me, being mortgage-free feels like the ultimate financial freedom and I would even consider taking a little from my ISA in 5-7 years to knock out the rest of my £116250 mortgage then just working my not-for-profit private job 2-3 days a week from the age of 43 til whenever I want.
Also wanted to add that I think owning a residential home is a total financial liability but a great emotional asset, whichvis why I'm taking a balanced-ish approach.
Stumbled across your video. I currently do both, pay into an ISA (sorry typo then) and a Sipp, but also overpay monthly to get to a point where I am able to pay off the mortgage earlier.
So confused at the comments about minute 7/8. "the mortgage is mo lowest debt at 4-6%" , implying she has debts that have interest rates beyond 6% and yet she is investing that money expecting tax free/charge free returns of greater than 6%? And why no discussion about charges and tax. You can only put 20k per year in a tax free ISA wrapper.
I think Cyra was referring to her student loan? Which currently has an interest rate of 7.8% but because of the way the student loan works making overpayments on the student loan might mean you end up worse off.
I have really enjoyed this discussion. I definitely would like more “chats “ by you all.
Thanks - more chats coming....
I do three ways. Overpay mortgage, save into S&S isa and pay into NHS pension. Regardless of mortgage rate, paying it off early thus reducing interest paid is guaranteed. Plus you have the peace of mind of having a secured abode.
We had a different take, hence it is such a personal decision. For religious reasons, we didn't wish to pay interest hence worked to pay off student loans and mortgage. On the side we also invested into ISAs, stocks and shares. Now we're aiming for cash buy property as a side rental income. Maybe it's not the most tax efficient but we felt happier doing things in accordance with our beliefs and values.
A really usual episode! I think it just highlights how personal all the decisions can be. I think it could have been useful to delve deeper into the tax implications! I wonder if anyone on the panel invests beyond ISA allowances for example. The position I've landed on is to invest the full lifetime ISA allowance in order to get the 25% government bonus, and then overpay the mortgage with any remaining income, as the flexibility of having lower outgoings is very powerful for me!
Beyond ISA, VCT and EIS are tax reducers and can be useful.
Your videos are always so helpful - thank you! I appreciate what you said about the rate of house price increase not actually being that significant anymore and you might actually gain more investing. I'm debating whether I should hold out buying my first home for a few more years (where I could hopefully afford something a bit nicer) and invest some of the deposit money I had saved up instead. A lot to ponder
😍
Thanks for this. I really enjoyed this. I'm in favor of overpaying but that's because I'm on a 5year fixed rate with a low interest - 1.64, from covid times. I'm hoping to pay as much off before the fixed rate ends.
Glad it was helpful!
First time i hear about Offset Mortgages. Please do a video of that.
My offset mortgage allowed me to increase the mortgage due to the increase in equity as want to do an extension. I changed my mind and used the equity for deposit to buy another house ( a little cheeky). Changed to repayment when interest rates low. Going to look at BTL at renewal. Higher rate tax payers would benefit more.
Nice!
I’m enjoying these videos thanks team overpay mortgage and I’ve been doing it for years. It’s psychological cos I don’t like having the mortgage hanging over me. I work for Defence as a civil servant so doing work in medical sector but there are some similarities I.e. a fairly good public sector pensions
Well done - hope this video helped.
I have to say, I have watched a lot of invest vs overpay mortgage videos on RUclips and this is the absolute BEST! I'm 37, single, part-time NHS locum (paying into NHS pension and ISA) and part-time private (paying into SIPP but stopping SIPP payments from April). I have £350K in SIPP and ISA and currently rent a flat. I'm about to buy a (residential) flat - £155K for 2-bed, 2-bath with balcony (sweet deal!) I'm putting down 25% (which I took out from my ISA) and the interest rate is 4.03% on a 5-year fixed rate. My term is 15 years so I'd be 52 if I don't overpay. My plan re: invest or overpay? To be continued below ...
My current plan is to do a bit of everything. Maxing S&S ISA is a non-negotiable for me because I want the option to retire very early. I can do that whilst still paying into NHS pension and overpaying mortgage a little. My minimum mortgage payment is £861 and I plan to pay £1019 to reduce my term from 15 years to 12 years (if interest rates stay around 4%) as I want to be mortgage-free by 50. I will review this plan in 5 years and see whether I decide to put a chunk onto the mortgage and pay off even sooner. I have enough exposure to humans through my career so I have ZERO desire to buy investment property and have tenants! For me, being mortgage-free feels like the ultimate financial freedom and I would even consider taking a little from my ISA in 5-7 years to knock out the rest of my £116250 mortgage then just working my not-for-profit private job 2-3 days a week from the age of 43 til whenever I want.
Also wanted to add that I think owning a residential home is a total financial liability but a great emotional asset, whichvis why I'm taking a balanced-ish approach.
Stumbled across your video. I currently do both, pay into an ISA (sorry typo then) and a Sipp, but also overpay monthly to get to a point where I am able to pay off the mortgage earlier.
Stumble no more - hit the subscribe button for a new video each week - unless we’re on call then it’s work/sleep/work repeat.
So confused at the comments about minute 7/8. "the mortgage is mo lowest debt at 4-6%" , implying she has debts that have interest rates beyond 6% and yet she is investing that money expecting tax free/charge free returns of greater than 6%?
And why no discussion about charges and tax. You can only put 20k per year in a tax free ISA wrapper.
I think Cyra was referring to her student loan?
Which currently has an interest rate of 7.8% but because of the way the student loan works making overpayments on the student loan might mean you end up worse off.