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Thread: Pay off Mortgage or invest the money elsewhere

  1. #1

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by ninianclark View Post
    My brother in law is in the process of being made redundant - with the money he is due to get - he could pay off his mortgage and have a little bit left over - or he could invest it an ISA or maybe a deposit for a buy to let property.

    Which one would you go for and why ?
    How old is your brother in law? Does he have any prospects for new employment? Is he coming up to retirement?

    At my age, I am 40 with 24 years on my mortgage, I would keep the money safe because I'd have to pay my bills until I found a new job. Chances are I'd get a lower wage as well, so I would need that money over time.

    If he falls on hard times, he may need to borrow money against the property again.

    How much is he paying in interest? The interest rates are ridiculously low, and so any return of 4% or more is likely to be worth more to him in money terms. I would consider P2P lending - I'm currently getting about 8% from one site.

  2. #2

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by ninianclark View Post
    My brother in law is in the process of being made redundant - with the money he is due to get - he could pay off his mortgage and have a little bit left over - or he could invest it an ISA or maybe a deposit for a buy to let property.

    Which one would you go for and why ?
    How old is he?

    His age could make a big difference

  3. #3

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by Kris View Post
    How old is your brother in law? Does he have any prospects for new employment? Is he coming up to retirement?

    At my age, I am 40 with 24 years on my mortgage, I would keep the money safe because I'd have to pay my bills until I found a new job. Chances are I'd get a lower wage as well, so I would need that money over time.

    If he falls on hard times, he may need to borrow money against the property again.

    How much is he paying in interest? The interest rates are ridiculously low, and so any return of 4% or more is likely to be worth more to him in money terms. I would consider P2P lending - I'm currently getting about 8% from one site.
    SNAP

  4. #4

    Re: Pay off Mortgage or invest the money elsewhere

    There is a simple answer, can he get a return higher than the mortgage cost?

    rates are low, but so are returns at the moment.

    I have had a similar case of whether to invest the money or payoff a chunk of the mortgage. I have invested the money with Zopa (p2p lending) at a rate of 6-10%, my mortgage is 3% so its worth doing for now, but the money is locked in for 5 years (1% charge to release early).

    If mortgage rates start going up then repaying the mortgage may be the better option

  5. #5

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by ninianclark View Post
    Not heard of Zopa, do they guarantee a minimum return ?, I must admit I thought all P2P loans were not guaranteed
    Funding Circle is getting me about 8%

    Put in, say, £100. Lend out to companies (spread it to reduce the risk). Loans can be anywhere between 6 months and 5 years. When you get enough interest, lend it out. Minimum you can loan to a loan request is £20.

    You can sell you loan at any time, charging a premium if you can get away with it. Loan requests are graded. A grade you get about 7% interest, down to grade E where you get 17.9%.

    I've lent to about 200 companies in 3/4 years, a few have defaulted but are repaying anyway, and my losses are far offset by my gains (hence my 7.9% return).

    Worth a try, seems more flexible than Zopa, but I could be wrong.

  6. #6

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by ninianclark View Post
    Dont think Brother in law would want to take that sort of risk, but Im going to look into it - I'd take a risk with a grand - I presume obviously the middleman takes a cut
    You pay a 1% fee on interest received. My return is minus fees and bad debts. It's not as risky as you'd think, if you spread the cash over many loans. Yes, you get the losses, but on average people are returning 6% or more. Their site has more detail.

  7. #7

    Re: Pay off Mortgage or invest the money elsewhere

    Bought some Bitcoin back in November and since then my investment has nearly doubled.

    https://blockchain.info/markets

    Bitcoin is seeing a huge amount of investment at the moment as people speculate on whether the Winklevoss twins will have their ETF (exchange traded fund) granted by the SEC.

    https://www.bloomberg.com/news/artic...on-bitcoin-etf

    Their ETF will basically be a $20m trust fund that trades off the fortunes of Bitcoin. If it gets the go ahead then it legitimises the electronic currency and some real players will begin punting in.

    Bitcoin is now at an all time high, reaching £1000 per Bitcoin yesterday for the first time. Might be worth bunging a few quid into it and holding on for the ride, you never know, in a few years that Bitcoin might be worth £30,000 or more.

  8. #8

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by Colonel Cærdiffi View Post
    Bought some Bitcoin back in November and since then my investment has nearly doubled.

    https://blockchain.info/markets

    Bitcoin is seeing a huge amount of investment at the moment as people speculate on whether the Winklevoss twins will have their ETF (exchange traded fund) granted by the SEC.

    https://www.bloomberg.com/news/artic...on-bitcoin-etf

    Their ETF will basically be a $20m trust fund that trades off the fortunes of Bitcoin. If it gets the go ahead then it legitimises the electronic currency and some real players will begin punting in.

    Bitcoin is now at an all time high, reaching £1000 per Bitcoin yesterday for the first time. Might be worth bunging a few quid into it and holding on for the ride, you never know, in a few years that Bitcoin might be worth £30,000 or more.
    It's now above gold, a headline I read this morning. Bitcoin seems risky, could well crash and burn, but people have been saying that for years.

  9. #9

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by Kris View Post
    It's now above gold, a headline I read this morning. Bitcoin seems risky, could well crash and burn, but people have been saying that for years.
    Even if the ETF doesn't get approved it would probably crash down to around $800 per Bitcoin then steadily recover again as it has done for the last few years.

    If it does crash that low I'll be happy to buy more at the lower price because I'm confident in its future with or without the SEC.

    I only wish I got in back in 2009 when you could buy 5,000 Bitcoins for $27

  10. #10

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by Colonel Cærdiffi View Post
    Even if the ETF doesn't get approved it would probably crash down to around $800 per Bitcoin then steadily recover again as it has done for the last few years.

    If it does crash that low I'll be happy to buy more at the lower price because I'm confident in its future with or without the SEC.

    I only wish I got in back in 2009 when you could buy 5,000 Bitcoins for $27
    There's that bloke who has a few million on a hard disk in a landfill site somewhere. He's still looking I think.

  11. #11

    Re: Pay off Mortgage or invest the money elsewhere

    no where to invest or decent rates , so pay off and stop paying them interest , that will be your saving

  12. #12
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    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by ninianclark View Post
    My brother in law is in the process of being made redundant - with the money he is due to get - he could pay off his mortgage and have a little bit left over - or he could invest it an ISA or maybe a deposit for a buy to let property.

    Which one would you go for and why ?
    Happened to me in 2016, I paid off my mortgage, I've just jacked my current job for another, I wouldn't have taken the chance if i was still with a mortgage.

  13. #13

    Re: Pay off Mortgage or invest the money elsewhere

    Pay off mortgage now whilst rates are low. Nothing like being free of it. You can save up quicker with less overheads if you are careful and then choose to invest where you want. Interest rates will rise eventually, they have never stayed low like this in history.....

  14. #14

    Re: Pay off Mortgage or invest the money elsewhere

    I'm in the mix for redundos too and have thought about the same thing. Personally, if I get the bullet, I'd all but pay off the mortgage and get a temp job anywhere to pay the other monthly bills.

    The problem with your investments these days is that the markets don't make any sense, as why put money you've earned into something that could be worth nothing tomorrow. Your house is the most important thing, followed by Council Tax, home insurance water rates. Every thing else can be rationed according to your circumstances.

    I guess it's all down to the individual and their age and family circumstances that will be the determining factor. My view has always been never borrow money, or if you have to, get out of debt as soon as you can.

  15. #15

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by life on mars View Post
    no where to invest or decent rates , so pay off and stop paying them interest , that will be your saving
    Not true. You can make more interest than you pay.

  16. #16

    Re: Pay off Mortgage or invest the money elsewhere

    http://www.moneysavingexpert.com/mor...ges-vs-savings

    Interest of 2.9% means you need to find a return of 3.6%, for example.

  17. #17

    Re: Pay off Mortgage or invest the money elsewhere

    There's no better way to invest than investing in property. Pay off the mortgage, sell house for profit and do same again

  18. #18

    Re: Pay off Mortgage or invest the money elsewhere

    If Ninianclark's brother-in-law is a steady Eddie type then paying off the mortgage and becoming debt free would help him sleep more soundly. I'd class p2p lending and bitcoin as gambling rather than investing.

  19. #19

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by Silures View Post
    There's no better way to invest than investing in property. Pay off the mortgage, sell house for profit and do same again
    Agree.

    Other options depend on your attitude to risk. Safety first for me.

  20. #20

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by Organ Morgan. View Post
    If Ninianclark's brother-in-law is a steady Eddie type then paying off the mortgage and becoming debt free would help him sleep more soundly. I'd class p2p lending and bitcoin as gambling rather than investing.
    Put it this way, I'm getting a better rate of return at a lower risk that The All Seeing Eye who bet solely on Man U, Rangers and Celtic. Is it riskier than a bank - yes, is it as risky as going to Ladbroke's to bet on Man U beating Rotherham United... no chance.

  21. #21

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by BlueWales View Post
    Agree.

    Other options depend on your attitude to risk. Safety first for me.
    I don't take risks with money, P2P lending is causing me no anxieties whatsoever.

  22. #22

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by Organ Morgan. View Post
    If Ninianclark's brother-in-law is a steady Eddie type then paying off the mortgage and becoming debt free would help him sleep more soundly. I'd class p2p lending and bitcoin as gambling rather than investing.
    Adding some fact to this throwaway statement (not untypical for you).

    This year I had £500 in my Funding Circle Account, i added another £500 over the course of the year.

    Returns so far this tax year - £80.45.

    Fees £7.79

    Bad debt £8.61

    That's mostly on £500.

    Last year I made £56 on £500 - £0 bad debt.

    Year before £36 on about £350.

    In 3 years, only 4 companies have defaulted (all this year). The one's director has just repaid the loan, two of the others are repaying monthly, and the fourth is likely to default with me seeing nothing. But, they only owe me about a fiver anyway.

    So, 4 companies out of circa 200 I have lent to over the years - and I don't lend any company more than £20. Could be risky to some, but for me the gains make the very small risks worthwhile. Plus, you're helping SMEs...

    Some people run to the cash machine if there is a hint of problems - there's caution, there's risk, there's sensible risk and then there's paranoia. Technically speaking, you are "gambling" putting money into Barclays or HSBC. Yes, the Government back up the first £75,000, but how long would it take to get that back? No-one really knows do they?

  23. #23

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by Kris View Post

    Returns so far this tax year - £80.45.

    Fees £7.79

    Bad debt £8.61

    That's mostly on £500.

    Last year I made £56 on £500 - £0 bad debt.

    Year before £36 on about £350.
    Christ, champagne on you mate.

  24. #24

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by itkman View Post
    Christ, champagne on you mate.
    I appreciate you are "considewably more wicher than yow", This post was directed to someone with a touch more intelligence (and class) who could has the ability to multiply the figures up and compare it to the interest remaining on a mortgage and/or other investments.

    I see you've not offered any advice, yet, and the OP would probably welcome some advice from an investment egg head like you. I would too because my ISA paid the same interest as above on an account holding 18 times more than my P2P account.
    Last edited by Kris; 04-03-17 at 07:29.

  25. #25

    Re: Pay off Mortgage or invest the money elsewhere

    Quote Originally Posted by ninianclark View Post
    Not heard of Zopa, do they guarantee a minimum return ?, I must admit I thought all P2P loans were not guaranteed
    Anything guaranteed will get you a hefty 1% if you are lucky.

    Invest in shares and you are at risk.

    The lower zopa rates have a guarantee pot to protect funds, but that will only work as long as that find does not run out.

    The zopa plus fund has a built in 3% assumed loss rate. So I lend out at an average of 10% (unprotected) but the advertised return is 7%. Though the loss rate could be higher or lower.


    In my opinion your money is at bigger risk investing in shares.

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