Need to put money to work

[TheWindhover]

Financially astute Vipers, your wise counsel please:

We have managed to accrue 60k in cash savings that is currently burning a hole in my current account. Broadly, financial status is as follows:

• full ISA allowances taken care of already for DP, me and the children
• have three flats with 45% equity (roughly) in each with facility for overpayment, 2 are interest only one is repayment, highest rate is 3.5% others are at 2.75%. We pay into pensions at £400 pcm each.

Currently living outside of uk with all bills taken care of until November at least - so will be able to save another cash cushion between no and then should contract end, so, financially speaking (no BTL flaming please...) should we:

• pay down existing higher rate mortgage?

• Acquire another investment property - my home town is suddenly looking an attractive option as industry returns...?

• invest in tracker funds?

• bolster pension fund (properties are in lieu of much of this already)?

• hang onto it pending the potential need for liquid funds for mortgage deposit on eventual return to the UK?

• Other...?

Any advice gratefully received/ gentle flamingos for stealth boasting accepted but we've been very lucky over the last few years and we want to make sure all of the sacrifices have been worth it when we eventually settle.

Keep a 6 month cushion in cash, in case disaster strikes and you can't work etc.

paying down the mortgages is a good idea but it does tie up the cash.

Beyond that I would personally probably invest in stock market but I like to do that, trackers are the cheapest and best if you done want to do too much research.

Sounds like you know what you are doing with property so that might be an idea yet you are already heavily into property.

Are your Isas shares or cash?

I would go for trackers personally. k think property is a hassle and very illiquid, but I am a bit lazy.

• only another month until new financial year and increased ISA allowance of £20K/ea (£4,128K junior), or do you mean that is taken care of too?
• difficult to say about the pensions without knowing how much actual equity you have in the properties and the value of your pension funds & ages.
• you already obviously know what you are doing with BTL - not something that appeals to me but sounds like a real option for you (like flum I would chose trackers over property - for the same reasons!)

What is your current UK tax residence status? This may have a bearing on your eligibility for some of the options.

We are non resident but pay tax on our UK earnings. Isas are 50/50 cash and funds - we have paid in full for the last 5 years and will continue to do so. Probably will switch to 100% funds this year I think.

Thanks for taking an interest, I think we'll look at trackers in whatever vehicle is appropriate for our residence status unless anyone has any other ideas?

I would have thought paying down mortgage is sensible - is it set against tax , is there a risk of going into a higher tax bracket with rent income?

Are you aware of the changes to taxation on BTL? I think it would be worth having a good look at the numbers to see how viable it is going to be for you. Personally, I'd probably look at paying some of the debt down - you have a lot of equity but also a lot of debt. I'd probably wait with upping pension contributions until you are back in the UK so that it's more tax effective. I'd also probably focus on building up some investments that can be accessed more easily and are not link to having more debt (i.e. mortgages).

Having said that, it really depends on your personal circumstances: when you want to retire, how bit your pot is, what your goals are (e.g. putting children through uni, giving money for deposits etc).

I am sidetracked by the tempting thought of changing my username to gentleflamingo...

meanwhile -
yes, check BTL tax issues. There is a theory on landlordzone that the eventual plan (goverments have those?) is to make private renting unworkable so that it will all be done by housing associations. Poor tenants - meantime protect yourself.