Author Topic: UK - mortgage vs. investment  (Read 1296 times)

Mercer

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UK - mortgage vs. investment
« on: September 14, 2014, 02:29:09 AM »
Really grateful for any general or even better UK-specific advice on paying off mortgage vs. investing!

I'm just starting out a Moustachian lifestyle. Very limited understanding of the investment side, mostly just cutting our cloth at the moment. My cash savings are  low, still in the area of building up some flexible money for emergencies: my main source of 'saving' is that I'm overpaying the mortgage by 500 a month: (mortgage is at 4%, so this is basically a 4% tax-free savings account.

We're intending to move to somewhere cheaper in 2-3 years, which is likely to release around 100-150k from the mortgage. Now, as I see it, I can either
a) put that into short-term savings until the mortgage term ends (a further 1-2 years) and use it to reduce that debt. This could potentially cut the mortgage to under 50k and let us pay it off very quickly.
b) put it into an investment ISA (vanguard?)

Thoughts? The theoretical return on the ISA is probably higher, but there's something nice about not having to pay the mortgage, plus it's a  'safer' bet.

RetiredAt63

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Re: UK - mortgage vs. investment
« Reply #1 on: September 14, 2014, 07:44:02 AM »
I can't help with the investment issue, but nice play on words!

Very limited understanding of the investment side, mostly just cutting our cloth at the moment.

plank

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Re: UK - mortgage vs. investment
« Reply #2 on: September 14, 2014, 10:22:59 AM »
Most of the math on these American personal finance boards doesn't apply to us (I'm in Germany)  We don't have the tax advantaged accounts or tax deductible mortgages.  I would say pay off the house if you can get it to 50k, you can get it to 0.  Once you do that, look into investing heavily.