What would be the best financial option here?

[ThatWullDo]

I’m 35. I have 40k savings and a mortgage of 130k on a 275k 2 bed house. Would it be better financially to do which of the following:

1. Put some of the money into the mortgage and stay put.

1. Get a bigger mortgage while I still can (on my current pay I could afford a property for circa 440 but I want to cut a day in the next year or so which will mean I won’t get this chance again). I understand in the long run this would make more money as a bigger investment and then I could downsize?

1. Keep the current house and get a buy to let. This would mean two smaller houses and I would never really be able to buy anywhere larger/nicer to live in myself. I guess with number 2 I could look to invest at a later date but at 35 I already feel quite old to be doing that.

Any wise mumsnetters thoughts would be really appreciated!

Not 3. Better to invest in your own home than a buy to let - they are much more difficult to make money from than in the past due to the shifting tax burden and regulatory requirements.

Presuming your mortgage interest rate is higher than your savings rate, overpay the mortgage by as much as you can afford whilst keeping 6 months' earnings as savings.

If I wanted to move for a bigger, nicer house no 2.

If I was happy with my current house I'd invest in stocks and shares, in an isa and via my pension. In my view less hassle than a buy to let and just as profitable.

You would need to factor in the cost of moving and higher utilities/council tax on a larger property when considering option 1 vs 2.

Or, what about option 4, depending on your mortgage interest rate, leave your mortgage as it is and put some of your savings and any other spare money into an investment ISA, which over time is likely to grow faster than what your mortgage interest is costing you - that's what we're doing, but our mortgage rate is 1.1%.

You need a 25% deposit for a BTL and you pay a 2nd home stamp dut-- so you will be at the lower end of the BTL for renting market.
You pay income tax on all of the rent (minus a small allowance) not the profit after your mortgage costs.
If you are a high for high rate tax payer they reduce the amount that you can borrow on a BTL to take this into account.
The amount of a BTL can is based on rental income not your income (unless they reduce the amount as above)

I wouldn't get more property.
I'd put some of the cash into a S&S ISA or pension.

Some savings, some overpayment on mortgage and some pension.
make sure your home is in top shape maintenance and upgrade wise.

Not 3. If your £40k represents a 25% deposit, you’re in FTB territory, don’t stop someone else getting on the ladder. I’d get an IFA and get some advice on investing it.

How's your pebsion?

Gah! How's your pension?

I'd diversify assets too, unless I wanted a bigger property for my own enjoyment but if a bigger garden or a flashier kitchen is t gong to bring anything meaningful to your life then pensions, shares etc. did you know you can get £2k of dividend earnings per year without paying income tax on that?

At your age I would go for 2. Long term you can always downsize to a 2 bed to release capital.

House prices can go down, but typically they all go down so relatively you stay in the same position in the housing market.