How to save/pay of mortgage/ pension ect ect

[watchesandwhisky]

I'm looking for ideas or tips on things I can do, and opinions on my plans. First a bit about my current situation.

Ok so now mortgage approved assuming the sale completes I will have a mortgage to pay at approx. £580 a month. 

I have practically zero pension provision (as in about 900 pounds!) and I am 39 in June. 

A place to live that is my own has to take priority over pension. So i used a sizable deposit and got a loan to value of 70%.

I have an emergency fund of 4 months full bills to include everything and the mortgage in cash.

I have secured a ten year fix mortgage at 2.59%

I plan to do overtime where possible - and use that money to long term overpay the mortgage...

With a ten year fix I'm thinking I may be better served putting all overpayments into a stocks and shares ISA on some low cost index trackers - ten years is plenty of time, and if the market takes a major dip when its close to re-fixing I don't have to cash out then - I can always get a new fix...

As for pensions I also need to do something, First I thought SIPP, but that is only tax free for the first 25% at 55 years old, then taxable. 

So I am thinking a stocks and shares Lifetime ISA, cannot get until 60 and can only pay into for the next 11 years but its completely tax free. 

I want to clear mortgage, but i also need to make pension provisions (I do get a workplace pension I am maxing out but as of now thats only adding £37 a week - from December i get a much better rate and it will add about £60 with no extra cost to me)

So instead of making overpayments to the mortgage provider I am thinking for every £50 i clear in overtime put £35 into a stocks and shares ISA, and the other £15 into a lifetime Isa to add to pension fund. 

Thanks for reading, what do you think of my plans?

Edited April 9, 2022 by watchesandwhisky

[Roy]

Yay! Congrats on the mortgage approval!

I think all your ideas are great BUT I'd come back to this in 6 or 12 months time.

You know what the mortgage cost is but you've yet to work out gas/electric/council tax, ground rent (if app), water, internet, car cost, etc. etc. (and the etceteras will multiply!)

Plus there will be increases this year. Now add in food and fuel. Patter of tiny feet?

It will take this long to work out your monthly costs and never rely on overtime to pay bills, that's for the pleasures in life.

Good luck on your new adventure 😀

[Gordy]

as Roy said, factor in 6 months worth of running costs and overtime is not a gauranteed income, if you plan on overpayment on your mortgage its something like a max of 9% of the balance per year (may be wrong, but not far off) the way the economy and world politics are going you have locked in for 10 years which is great but assume an increase regularly over that period and by the time you need to look for another product the interest rates may have jumped, lowering your mortgage balance can counter-act increases so you wont get stung with a payment you might struggle with.

I'm lucky as mortgage paid off two months ago and all of my property is now an asset i can utlise fully if needed. 

[Stacktastic]

4 hours ago, watchesandwhisky said:

I have practically zero pension provision (as in about 900 pounds!) and I am 39 in June.

I have secured a ten year fix mortgage at 2.59%

Just done the same - 2.08% for 10 years. Great move I think - cant see it getting much lower?? 
Im only a few years older & dont have that much - but it adds up. 
I estimate I have saved about 20k in the last year. 

I think I will overpay the mortgage if I get to a certain level of savings & investments. `
Would be nice to own the house at 52 especially if interest rates go up considerable. 
Imagine another period of 15% the average hope with car loans and stuff will be screwed!! 

1 hour ago, Roy said:

I think all your ideas are great BUT I'd come back to this in 6 or 12 months time.😀

I spend all day trying to work out what to do - literally & im still confused. 

We are in an everything bubble & as much as there are beaten down stocks - its a tough call to invest in to equities!! If i had a choice right now it would be GDX, Wheaton & a basket of emerging market ETF's, but even they could tank on a mega downturn as they are listed on the FTSE or US exchanges!! 

The only thing IU can personally see worth investing is Silver, Rum/Whiskey, watches, Lego sets, art and other tangibles. 
Commercial property might have some deals as a lot of people are working from home, but thats mega money. 

Your best bet is to focus your energy on another income stream or several? Vending machines, digital courses, side business. 
Seeting up a very profitable business thats recession proof is probably the best thing & convert it to metals. 
One that requires minimal time to run, is scalable & has little opperating or purchasing costs. 

Sitting on mountain of cash is not abad idea right now you have a plan to execute - I am & so is warren Buffet..  
Crypto, stocks, property you name it should theoretically be on fire sale within a decade if history is anything too go by. 

I dont like the idea of a pension btw. (unless your employed as they add to it, but its still fiat locked with governments)
Look at interactive brokers new ISA - learn how to invest in stocks and bide your time. 
That way your proficient at reading charts / balance statements and knowing whats what. 
 

Edited April 10, 2022 by Stacktastic

[papi1980]

In my view SIPP is the most tax efficient vehicle in the U.K. at the moment (especially if you are a high tax earner). In salary sacrifice when you put funds in SIPP you are net of tax and get taxed after you start withdrawing, with ISA/LISA you put funds post tax and not taxed anymore 

both work ok for me, but depends when I plan to spend the money

one rule I have for everything I invest in: I don’t invest until I understand what it is to the last detail (that means, funds, single shares, ETF/ETC, crypto, NFTs, PM, property, Pokémon cards or playboy magazines

until I get absolutely clear 120% clear idea of

1) how it makes cash / profit 

2) what are its risks

3) how much it will cost me to acquire it

4) why someone will buy it from me

i don’t get involved 

Hope that helps 

 

 

[Stacktastic]

1 hour ago, papi1980 said:

playboy magazines

Now we are talking - I bet there is money in vintage porn.
They always say make sure you invest into things you understand & also like doing. 

Porn, Rum, Stocks & Gold (in that order).  😛 

Edited April 10, 2022 by Stacktastic

[papi1980]

1 hour ago, Stacktastic said:

Porn, Rum, Stocks & Gold (in that order).  😛 

Very true...Actually the first one is growing multiple times faster than the other three... especially during lockdowns

 

[Stacktastic]

12 minutes ago, papi1980 said:

Very true...Actually the first one is growing multiple times faster than the other three... especially during lockdowns

 

I wonder if that Robot Scrlett Johansen has been updated or put into a hybrid VR setup?  
I would trade all my metal for that. I would have to buy a Poldark version to keep the wife happy though. 

I have often wondered who owns the popular cam sites - they must sit in a control room watching millions flooding every day!! 
Probably triads or other similar organised crime gangs?? No idea. 

ON track can anyone educate me to the benefits of  SIPP for self employed vs just investing into stock ISA's and metal?? 

 

Edited April 10, 2022 by Stacktastic

[papi1980]

37 minutes ago, Stacktastic said:

I wonder if that Robot Scrlett Johansen has been updated or put into a hybrid VR setup?  
I would trade all my metal for that. I would have to buy a Poldark version to keep the wife happy though. 

I have often wondered who owns the popular cam sites - they must sit in a control room watching millions flooding every day!! 
Probably triads or other similar organised crime gangs?? No idea. 

ON track can anyone educate me to the benefits of  SIPP for self employed vs just investing into stock ISA's and metal?? 

 

That is the future and the metaverse will skyrocket these ‘services’:) you wouldn’t even need robots (there was a cool series of Black Mirror on that)

re SIPP vs stock ISA, not a financial advise  I have both and use SIPP to get 8% from my employer on my gross salary before tax (but will pay income tax normally when i withdraw and only after I reach 55, can’t use it before that). I also contribute 8% so 16% in total. My bet is when I’m old I will need less income than now (might be totally wrong though)

for my share ISA I put money myself (from my after tax income) but I will not pay tax on any capital gains or dividends. I can withdraw at any time but can not pay more than 20k per annum (hard to reach that) 

hope that is helpful but ping me on PM if any questions 

 

 

 

 

[watchesandwhisky]

On 09/04/2022 at 23:54, Roy said:

Yay! Congrats on the mortgage approval!

I think all your ideas are great BUT I'd come back to this in 6 or 12 months time.

You know what the mortgage cost is but you've yet to work out gas/electric/council tax, ground rent (if app), water, internet, car cost, etc. etc. (and the etceteras will multiply!)

Plus there will be increases this year. Now add in food and fuel. Patter of tiny feet?

It will take this long to work out your monthly costs and never rely on overtime to pay bills, that's for the pleasures in life.

Good luck on your new adventure 😀

Hi Roy, I think i have it mostly worked out, i did this pre mortgage application so I could show them I knew what my expenses would be. Let me know if any of these stick out as off, I think I have overestimated on some to be on the safe side.

Per month

Water and sewerage - £31

shopping - £140

Car maintenance, fuel ect £100 (not a lot but a 2 year old honda so reliable and cheap to run)

holiday fund £50

sim contacts £14

mobile phone replacement money £10

internet £25

electricity £150 (its a 1 small bedroom, 1 open plan lounge/kitchen type flat - with electric boiler, flat is EPC - B )

clothes £20

Life insurance - £50

unexpected (prescriptions, medicine, whatever else ect ) - £50

council tax £108

ground rent/service charge £100

Mortgage repayment - £550

Total bills and everything £1400, say £1500 to give some leeway. 

My basic salary just about covers this, but overtime will be needed for savings or overpayments for sure! I guess a figure of £7500 would be good for a 6 month all in emergency fund. 

 

Edited April 12, 2022 by watchesandwhisky

[watchesandwhisky]

On 10/04/2022 at 00:08, Gordy said:

as Roy said, factor in 6 months worth of running costs and overtime is not a gauranteed income, if you plan on overpayment on your mortgage its something like a max of 9% of the balance per year (may be wrong, but not far off) the way the economy and world politics are going you have locked in for 10 years which is great but assume an increase regularly over that period and by the time you need to look for another product the interest rates may have jumped, lowering your mortgage balance can counter-act increases so you wont get stung with a payment you might struggle with.

I'm lucky as mortgage paid off two months ago and all of my property is now an asset i can utlise fully if needed. 

Bet that feels great! 

Yep I think interest is going to be a lot more by the time the ten year fix is up for sure. 

 

[watchesandwhisky]

On 10/04/2022 at 01:27, Stacktastic said:

Just done the same - 2.08% for 10 years. Great move I think - cant see it getting much lower?? 
Im only a few years older & dont have that much - but it adds up. 
I estimate I have saved about 20k in the last year. 

I think I will overpay the mortgage if I get to a certain level of savings & investments. `
Would be nice to own the house at 52 especially if interest rates go up considerable. 
Imagine another period of 15% the average hope with car loans and stuff will be screwed!! 

I spend all day trying to work out what to do - literally & im still confused. 

We are in an everything bubble & as much as there are beaten down stocks - its a tough call to invest in to equities!! If i had a choice right now it would be GDX, Wheaton & a basket of emerging market ETF's, but even they could tank on a mega downturn as they are listed on the FTSE or US exchanges!! 

The only thing IU can personally see worth investing is Silver, Rum/Whiskey, watches, Lego sets, art and other tangibles. 
Commercial property might have some deals as a lot of people are working from home, but thats mega money. 

Your best bet is to focus your energy on another income stream or several? Vending machines, digital courses, side business. 
Seeting up a very profitable business thats recession proof is probably the best thing & convert it to metals. 
One that requires minimal time to run, is scalable & has little opperating or purchasing costs. 

Sitting on mountain of cash is not abad idea right now you have a plan to execute - I am & so is warren Buffet..  
Crypto, stocks, property you name it should theoretically be on fire sale within a decade if history is anything too go by. 

I dont like the idea of a pension btw. (unless your employed as they add to it, but its still fiat locked with governments)
Look at interactive brokers new ISA - learn how to invest in stocks and bide your time. 
That way your proficient at reading charts / balance statements and knowing whats what. 
 

20k savings in a year is awesome! so you plan to save and invest rather than overpay? Im thinking along the same lines really, each day i do 5 hours overtime im throwing £10 onto a LISA towards pension and £30 into a S&S ISA. Should add up pretty fast as i do that 4 times a week usually. 

[watchesandwhisky]

On 10/04/2022 at 08:43, papi1980 said:

In my view SIPP is the most tax efficient vehicle in the U.K. at the moment (especially if you are a high tax earner). In salary sacrifice when you put funds in SIPP you are net of tax and get taxed after you start withdrawing, with ISA/LISA you put funds post tax and not taxed anymore 

both work ok for me, but depends when I plan to spend the money

one rule I have for everything I invest in: I don’t invest until I understand what it is to the last detail (that means, funds, single shares, ETF/ETC, crypto, NFTs, PM, property, Pokémon cards or playboy magazines

until I get absolutely clear 120% clear idea of

1) how it makes cash / profit 

2) what are its risks

3) how much it will cost me to acquire it

4) why someone will buy it from me

i don’t get involved 

Hope that helps 

 

 

For high tax earners SIPP does seem best for sure, I would say average ish wage- Lifetime ISA seems the best for me I think as its tax free and still get the tax relief. I do a salary sacrifice with work for pension I do 6% and they match it with 12% (or well in 8 months they will - for now im on crappy basic 6% with 3% added for the first year of employment)

Edited April 12, 2022 by watchesandwhisky

[CANV]

If your mortgage is 2.6 per cent. And inflation is ‘officially’  approaching 8 per cent (it will be far higher the less well off you are) then-overpaying your mortgage Is not a good idea ..  

should you have spare cash then you need an inflationary hedge as you have mentioned.  

Shares , risky.   

Bitcoin, bonkers 

Pm’s..  well anything can happen there   Gold prob the safest 

it’s so hard the avoid inflation… unless you are fairly well off and already own assets that are onside, or can afford the inevitable swings in value 

probably invest it in some fund and choose your risk level. At least it’s spread across a range of assets then 

Edited April 12, 2022 by CANV

[dicker]

If at all possible, start and run your own company.  There are genuinely great advantages in doing so.  Particularly useful is the ability to elect when to pay yourself or simply hold funds within the company in one form or another.  

[GoldDiggerDave]

I think it's nuts to wish away the best part of your life to get to 68 and have a a goal of having lots of money.  I'm not saying be stupid but most are controlled with the dream of a pension, when you get there no amount of money will buy back your youth.   

[CANV]

1 minute ago, GoldDiggerDave said:

I think it's nuts to wish away the best part of your life to get to 68 and have a a goal of having lots of money.  I'm not saying be stupid but most are controlled with the dream of a pension, when you get there no amount of money will buy back your youth.   

Very true.   No one ever laid on their death bed wishing they had spent more time at work 

[Roy]

3 hours ago, watchesandwhisky said:

shopping - £140

Is that for a couple?

£35 a week?

I'm not trying to be negative bud, I remember being in your shoes once 😁

[Gordy]

3 hours ago, watchesandwhisky said:

Hi Roy, I think i have it mostly worked out, i did this pre mortgage application so I could show them I knew what my expenses would be. Let me know if any of these stick out as off, I think I have overestimated on some to be on the safe side.

Per month

Water and sewerage - £31

shopping - £140

Car maintenance, fuel ect £100 (not a lot but a 2 year old honda so reliable and cheap to run)

holiday fund £50

sim contacts £14

mobile phone replacement money £10

internet £25

electricity £150 (its a 1 small bedroom, 1 open plan lounge/kitchen type flat - with electric boiler, flat is EPC - B )

clothes £20

Life insurance - £50

unexpected (prescriptions, medicine, whatever else ect ) - £50

council tax £108

ground rent/service charge £100

Mortgage repayment - £550

Total bills and everything £1400, say £1500 to give some leeway. 

My basic salary just about covers this, but overtime will be needed for savings or overpayments for sure! I guess a figure of £7500 would be good for a 6 month all in emergency fund. 

 

Off hand, i'd say the shopping is underestimated... you're only allowing £5.00 per day to feed yourself and buy all of the other household items needed to live ... (yeah, people will give you advice on being able to cook for yourself for a fiver a day but you can only eat so much soup, rice dishes, leftovers, stews, home made baking, (if you can) before you get fed up of it all), you need variety or you will go stale, a one off per month chinese/indian/kebab etc will knock that weekly budget flying, and you need to factor in washing up liquid, washing powder/liquitabs, cleaning items, soap, shampoo, bog roll etc.... you get my drift with this one... I'D DOUBLE IT... even for a single bloke you need to be able to treat yourself occasionally...

Car maintenance, if you dont travel or drive much it may be done but allow for unforeseen, punctured tyre, minimum of around £60.00 ish depending on car unless you go for the pre-worn tyres, not recommended, false economy as is re-moulds... 

I've been self-employed since 1988 and its hard to factor for vehicles on a monthly budget if you own the vehicle privately

a full tank even on a smaller car will currently knock you back £60.00 + (I have a 1.0 eco-boost Focus and even that takes £70.00 to fill up)

other stuff.. .seems reasonable, i guess you will only be streaming tv or dont watch/record live programs? TV licence is £15.00 per month

socialising? 

It's good you have got your flat and planning for the foreseeable, so many people pay more than that in rent and never own it.. my neighbours to the left of me pay £750.00 per month for their rent, 3 bed semi in Newcastle worth around £220,000... rent is on the high side for you southerners but the people to my right who moved up from the smoke (paid £1500 for a one bed flat with no garden) now pay just under £500 for their mortgage, same size and layout as the nighbours who rent... 

[HerefordBullyun]

26 minutes ago, Gordy said:

Off hand, i'd say the shopping is underestimated... you're only allowing £5.00 per day to feed yourself and buy all of the other household items needed to live ... (yeah, people will give you advice on being able to cook for yourself for a fiver a day but you can only eat so much soup, rice dishes, leftovers, stews, home made baking, (if you can) before you get fed up of it all), you need variety or you will go stale, a one off per month chinese/indian/kebab etc will knock that weekly budget flying, and you need to factor in washing up liquid, washing powder/liquitabs, cleaning items, soap, shampoo, bog roll etc.... you get my drift with this one... I'D DOUBLE IT... even for a single bloke you need to be able to treat yourself occasionally...

Car maintenance, if you dont travel or drive much it may be done but allow for unforeseen, punctured tyre, minimum of around £60.00 ish depending on car unless you go for the pre-worn tyres, not recommended, false economy as is re-moulds... 

I've been self-employed since 1988 and its hard to factor for vehicles on a monthly budget if you own the vehicle privately

a full tank even on a smaller car will currently knock you back £60.00 + (I have a 1.0 eco-boost Focus and even that takes £70.00 to fill up)

other stuff.. .seems reasonable, i guess you will only be streaming tv or dont watch/record live programs? TV licence is £15.00 per month

socialising? 

It's good you have got your flat and planning for the foreseeable, so many people pay more than that in rent and never own it.. my neighbours to the left of me pay £750.00 per month for their rent, 3 bed semi in Newcastle worth around £220,000... rent is on the high side for you southerners but the people to my right who moved up from the smoke (paid £1500 for a one bed flat with no garden) now pay just under £500 for their mortgage, same size and layout as the nighbours who rent... 

Wise advice there Gordy!

[Gordy]

5 minutes ago, HerefordBullyun said:

Wise advice there Gordy!

why thank you kind sir.... spent a lot of frugal years budgeting i guess 😂

[Gordy]

and we can all remember when mortgage rates hit 15% in the early 90's eh? well at least some of us can... 😂

[HerefordBullyun]

1 minute ago, Gordy said:

and we can all remember when mortgage rates hit 15% in the early 90's eh? well at least some of us can... 😂

Coming to a doorstep near you soon!

[GoldDiggerDave]

8 hours ago, watchesandwhisky said:

Hi Roy, I think i have it mostly worked out, i did this pre mortgage application so I could show them I knew what my expenses would be. Let me know if any of these stick out as off, I think I have overestimated on some to be on the safe side.

Per month

Water and sewerage - £31

shopping - £140

Car maintenance, fuel ect £100 (not a lot but a 2 year old honda so reliable and cheap to run)

holiday fund £50

sim contacts £14

mobile phone replacement money £10

internet £25

electricity £150 (its a 1 small bedroom, 1 open plan lounge/kitchen type flat - with electric boiler, flat is EPC - B )

clothes £20

Life insurance - £50

unexpected (prescriptions, medicine, whatever else ect ) - £50

council tax £108

ground rent/service charge £100

Mortgage repayment - £550

Total bills and everything £1400, say £1500 to give some leeway. 

My basic salary just about covers this, but overtime will be needed for savings or overpayments for sure! I guess a figure of £7500 would be good for a 6 month all in emergency fund. 

 

I have been a prolific saver and budget reducer for the last 14 years.   Paid off the mortgage and 100% of all debt before 38 all while earning modest income and being made redundant 3 times in the process. 

Consider budgeting  other costs

Going out and enjoying yourself?  With the best will in the world you can't sit at home with the lights switched off.    £100 per month easy you might not got out for a bit but random stuff like going to a wedding buying a present and other social events Mrs Birthday when's that ever been free or if you meet someone new that always costs!!!!

Insurances, Car, home, contents etc even if you are in an apartment you will have to insure your contents  or more valuable items.

£100 for car maintenance including fuel is very low (even for low milage)  you will have your MOT next year to consider plus things like a new tyre is £6.66 per month 1 x £80 balanced and fitted.  Anti freeze in winter and the jet wash?  I know that sounds pedantic but it's all out goings. 

Dental work It's £60-80 a time for a basic check up and polish, if they do any work it's always a couple hundred quid x 1 people  £13.66 per month over 1 year. Treat this as a fixed cost, the more you put it off the more it costs. 

Home improvements/renewals easy £40-50 per month you might not spend this every month but things like carpets, a new fridge, anything within your 4 walls will either need to be bought or replace at some point.  Any replacement appliance is £300+ or the DFS sofa on the never never, TV, computer, smart speaker?

Stationery, postage if you are selling coins and PM's just cost me £25 for some flips and a £17 non sterling charge for and NGC submission tonight.......LOL

The biggest thing thats missing is allowing for inflation...The £1,500 budget could be £1,800 by the end of the year with all best intentions. 

It is great mate you have a plan and I'm no way trying to be a wise ass,  It's best to over budget and if you don't spend it all it's additional savings than under budget and your back is against the wall every month and trust me this is when every bill you don't want keeps on coming at you.   You need to put yourself in a positive every month even if it's a fiver as once you are in the negative every month like millions of people it's next to impossible to escape the blackhole.  

Don't know your living situation if you are single move a mate in for a while as this will subsidise your monthly costs.   

 

 

 

 

 

Edited April 13, 2022 by GoldDiggerDave

[GoldDiggerDave]

Also don't know if you have spoken with @MancunianStacker he's our resident mortgage adviser.