Owning your own home

He would have done even better if he’d borrowed an extra £10k back then and chucked it in bitcoin.

The point is that certainty is valuable, any when you can buy it cheaply you probably should.

I take your point but paying 2.5x more interest than he had to on the amount he borrowed over a decade was not, imo, a cheap, wise or indeed necessary purchase. Still, you pay your money and take your choice.

I bet they really appreciated your input

On the face of it, it’s possible that they made a pretty good choice that met their requirements. You, on the other hand, just got lucky.

Interesting so is fixing for 5 years a best bet compared to fixing for 7? 2.7pc at 5 va 2.5pc at 7 for example

It's a risk reward calculation. The difference between 1.5 and 2.5 % is a lot less galling if you guess wrong than double digit %s if rates ever go back there.

https://www.rightmove.co.uk/properties/125769089#/?channel=RES_BUY

No wonder Carrie demanded to get the interior designers in.

Our fixed term is up in December, at which point we may be ruled by a horse militia so difficult to say what interest rates will be.

The bathroom is so weird, almost as if it’s designed to fit in a room several sizes smaller.

Anyone who is on a fixed rate mortgage and is in the luxurious position of making overpayments, be aware there's a good chance you can now get a fixed rate savings account with an interest rate that will exceed your mortgage rate:
https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/
Sure, investments might well do much better but if you're taking out a fix you presumably value certainty...

These probably don't factor in the recent 0.5% hike in the base rate either, so expect even better savings deals in the near future:

1y fix: 2.96%
2y fix: 3.31%
3y fix: 3.37%
5y fix: 3.5%

Also if you don't have a chunk of change sitting around to dump into a savings account but you do have spare cash each month you're chucking into the mortgage pit, you will probably be better off using a regular savings account instead:

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

5% with YBS (max £500/month), others are around 3.3-3.5%.

Note that we're talking marginal gains here - £500 a month at 5% is £161 of interest over a year, so even if it's twice as good as you'd do elsewhere it's only an £80 improvement. Plus, all these numbers are way lower than inflation so you're really just losing value more slowly than if you'd done nothing, although since your debt is also devaluing at inflation perhaps that is fine.

If you have made overpayments in the past, you might also be able to take a payment holiday and instead pay into a savings account which delivers a better return.

Useful, thanks - these aren’t ISAs though right? So you might need to adjust that return to take into account the tax you could have to pay on the interest income, which could narrow the gap.

The bathroom is so weird, almost as if it’s designed to fit in a room several sizes smaller.

Ha - like having a crap in the middle of a field.

Does anyone have experience of applying SDLT Multi Dwelling Relief?

We’ve been told by our solicitor our purchase should qualify, but everything I’m reading is giving me the fear that at some point in the future HMRC will decide they don’t agree and demand it back.

you're really just losing value more slowly than if you'd done nothing

But this is important.

As is remembering that savings compound.

Thanks for the prompt and the link 👍

It is an area where there are loads of spurious claims and "reclaim agents" helping people to ask for sdlt back if they didn't claim mdr but could have done.

How much non-residential will the property have and what is it?

I think HMRC are looking at it but I'd be surprised if any change is retrospective

Indeed, those are taxable savings although if you're earning enough that you need to pay tax on interest then I expect you can get more creative than just an ISA.

^^ overpayments go against capital whilst standard payments go against interest, does that make a difference ?

Edit: I am not a financial advisor. Do your own calculations.

Essentially no, since when your mortgage fix comes to an end you should be able to pay off whatever you like without any penalty charges (OK you might need to switch to the SVR for a few days or something).

Then again you've probably not earnt enough in interest to get you anywhere near the penalty-free overpayment limit.

This all assumes that your mortgage interest compounds in the same way as your savings interest. Usually this is daily I think, but I usually find it very hard to find it stated clearly.

Edit 2: Also standard payments go against interest+capital unless you have an interest-only mortgage, which you probably don't.

Interest is applied to capital, so you're trading accruing more debt at (say) 2% vs earning more cash at (say) 3%. Since you can pay debt with cash, you should choose the option that lets you accrue cash at a faster rate than you are accruing debt. Just remember the cash is already earmarked for your mortgage so don't go spending it unless you have an emergency.

There's no tax on payments to your mortgage but there is potentially tax on your interest income, which could of course affect where the break-even point sits.

Edit 3: It's almost certainly better to contribute additional payments to your pension than do any of this.

Maybe - I guess the £500 of tax free interest is for everyone except upper rate taxpayers isn't it (so £150k income)?

Not sure whether £150k income opens up that many opportunities to be creative, but maybe

That's my understanding, although also savings accounts can be joint accounts in which case the interest is split 50:50 between the account holders.

TIL the list of things which are counted as taxable interest income is longer than I thought: https://www.gov.uk/apply-tax-free-interest-on-savings

1. bank and building society accounts
   
2. savings and credit union accounts
   
3. unit trusts, investment trusts and open-ended investment companies
   
4. peer-to-peer lending
   
5. trust funds
   
6. payment protection insurance (PPI)
   
7. government or company bonds
   
8. life annuity payments
   
9. some life insurance contracts
   

It's almost certainly better to contribute additional payments to your pension than do any of this.

I'm kind of working on the assumption that I'm paying into a pension to pay the current pensions, but that it won't really exist when it's time for me to retire, or that retirement age will get further away, or that we'll have societal breakdown before then.

Public tax that goes towards pensions, absolutely.

Private pensions are long term private investments and so don’t fund anyone else’s current or future pensions directly.

Just to double check, we are paying a sizeable mortgage in London, however we intend to move to Sheffield and get an actual house for like 2/3 of our existing flat, is it doable to change mortgage to a smaller one to borrow less in 5 years time when the fixed rate end?

Oh really? They don't fund other people's pensions right now? I didn't realise that. I still feel like the whole thing is going to fall apart. Our pension schemes are tied up in fossil fuels and other stuff that doesn't seem fantastically future proof. I'll be happy if in 25 years we have a halfway liveable planet.

Rumour is he wants to move to Stradella Road in Herne Hill