- May 8, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Financial Situation Overview and Options for Action
### Current Financial Status
– £53k remaining mortgage
– £52k in current account
– £2k Investments
– Been working for 18 months with no statutory redundancy benefits
### Recent Financial Decision and Unexpected Circumstances
I withdrew £50k from Premium bonds to my current account to pay off a large chunk of my mortgage. Currently on an 8.75% SVR, paying £570 a month. Additionally, I have £5000 on a 0% interest credit card expiring in October.
However, I received news of being made redundant with a three-month garden leave + holiday paid. Despite being in the final stages of job interviews, this unexpected situation has prompted me to reassess my financial strategy.
### Possible Courses of Action
1. Proceed with the original plan of paying off a significant portion of the mortgage.
2. Pay off 30-40k of the mortgage to reduce monthly payments and retain the remainder in the bank until securing another job.
3. Maintain current financial status and wait until securing employment before making any major financial decisions.
4. Explore options for remortgaging to a lower rate in conjunction with the above choices.
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Slow down – pause. You have options here. You have 3 months to get a new job – just wait it out and push your plans back. You might get a job next week.
Have you also considered placing the money into a high interest account (i.e. 4-6%) until you secure a new job.
Then after you have secured a new role and have settled in after 3-6 months, you could then pay down the mortgage.
Do nothing until you’ve been *happy* in your new job for 2-3 months.
Be careful – garden leave and PILON aren’t the same thing. Are you getting garden leave, where you have to be available to them for that time period or are you being paid in lieu of a notice period ?
Personally I’d smash that mortgage with the 50k as planned. Without a mortgage you can likely live on £1k a month, meaning half a year of contingency with your pay whilst on gardening leave .
You’ll also be able to claim Universal Credit if you’re unemployed after your gardening leave ends, which you won’t be able to do with a 50k lump of cash sat in the bank!
In my head you’ve struck gold, you were already in the final interview process and ready to leave and now you’ve been given 3 ‘free’ months and I’m assuming on top of that some redundancy pay.
Think positive, you’ve already done well in this interview process so the likely hood you’ll get this job or others within 3 months is good.
A wise man once said:
Alright stop, collaborate and listen.
..then something to do with ice, yes lots of ice, I forget the rest..
B seems like a reasonable compromise, until new employment arrives. It allows you some runway to get the right job, and allows you to consider a job with less pay, if it’s the right job.
Ooof, that’s rough. Can you take the payment as redundancy? That will be tax free.
Leave the credit card for now – just continue making the minimum monthly payments.
It’s good that you’re interviewing, but don’t count your chickens before they’re hatched. Talk to your bank about whether you can remortgage to a lower fee. They may or may not ask about your employment status, so you’ll need to be truthful about that.
If you can’t, I think I’d probably hold off on paying down the mortgage until you’ve secured a new job. Switch it to interest only, rather than capital and interest. Stick the cash into a high interest account.
Best of luck.
I would keep 1 year of expenses as emergency fund, use the rest to repay partially if any left. Then remortgage for a couple of years if you can. When you are settled in a new job and you receive your redundancy pay you can still look into overpaying 10% a year for free with most mortgages. At the end of the two years repay in full if you still want to. It won’t cost you so much in interest and it will give you piece of mind to have this cushion.
For example, if you outgoings are £2,000 a month, keep £24,000 to hand, repay £28,000 and remortgage £25k.
Does your lender have a tracker rate with no early repayment charge that you could switch to?
>Do nothing until I secure another job, leave money in bank or put back into premium bonds /investing
This one. Just keep laying your mortgage at your regular rate, use this money to get you through until you have another stable job, reassess when you pass your probation and pay off the mortgage at that point if it still makes sense. Pay off the credit card when the interest free period ends regardless of what you choose to do otherwise.
Put one years expenses in a saving account.
Pay the rest off the mortgage.
See what deals your lender has that has no early repayment charges, and switch to that.
• Pay 40K off of mortgage
• Live off 5k whilst you get another job
• Leave 5k as an emergency fund
• If successful in getting a job – pay 4k off credit card with emergency fund.
• Now you have more work – aggressively pay off the remainder of CC & Mortgage
Enjoy your life with no mortgage – congratulations
One thing to consider is you won’t be entitled to any universal credit once unemployed with those savings. If you pay down the mortgage, resulting in less than 16k savings, you’ll qualify for support
You’re actually in a very blessed position with plenty of time and money coming in to catch your breath and find a good new job, the alternative could be being left with no job on short notice and having to rush and take the first thing that comes along.
1 – Park as much of that money as you can into a good interest savings account while you get your ducks in a row.
2 – Get a new job, you have 3 months + holiday to do this but even if it takes longer there is no shame I’m borrowing from savings to cover expenses. That’s what they’re for.
3 – Once you’re past your probation and content in new job, revisit plan to pay off mortgage.
4 – Enjoy life mortgage free
Hold your horses. Wait and look for a new job.
Option 3 – do nothing, put money in the highest interest instant access account you can and hold off doing anything until you have been in your new job for 6 months and happy.
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High interest but easy access savings for the money. Don’t lose access to it for now by paying off your mortgage. Focus on getting the next job.
Slow down, don’t panic, pay off half the mortage, keep the other half as cash buffer (assuming it covers like 6-9 months of expenses) until you find your next role, off the half of you keep, max out your isa so your interest is tax free, keep the rest in a high interest current account.
Just wait.
Best case you have a job next week, paying more, and can resume your plan with negligible impact.
Worst case you can’t get a job for 12+ months. In that position having no mortgage doesn’t mean you can afford the rest of your bills, you’d have no income and no savings. With a £50K pot you can draw down from it to survive until you find a new job and then resume the plan.
Risking everything over a couple % extra in mortgage fees / investment returns etc isn’t worth it.
C seems by far the most sensible to me. You might end up paying a little bit more due to interest than you otherwise would have but it leaves you very secure for job hunting.
Sounds like you have an excuse to make a 25k off the mortgage and the credit card in full, keep the rest as a buffer incase the work situation isn’t great.
Then use the 3 months or so to look for another position…
Perhaps at a lower position with less stress or less hours.
Once you have a job sorted and pass your probationary period you’ll know what your earnings are and how much more you can clear off your mortgage.
Hang fire for a few months. Too many things are in flux.
Do nothing…. Yet.
8.75%? How come your mortgage interest is so high?
Is there a reason you’re unable to get a fix at a lower rate?
Secure the new position then pay off mortgage and cc with redundancy pay then rebuild the savings.
I personally wouldn’t, just keep on going as you are, at least you know you have the 53k in the bank as back up
Never have no money in your bank
Eat the interest cost for a couple of months
If it was me, I would do option 2 (depending on your confidence of finding a new job) – I would do this after I hear back from the final round interview as you may get that job anyway.
I would pay off 40k leaving 13k mortgage & leaving you £12k plus the 3 months pay you will receive. That is a fairly comfortable buffer for expenses in my opinion to find a new job & pass the 3-6month probationary window. Once I’d been in my new job a year I would then look at options to pay off the final chunk
I’d still pay a good chunk of that off and continue looking for work
Do nothing until you know your circumstances better. Wait until you get a job.
Please if you don’t pay it off in full, remortgage. Call a free broker, I work at one if you’d like the name and it’s all digital, and get yourself off of SVR. Rates are around 5% at the minute, but even if you get a 2 year fixed you’ll be better off than you are now
Please if you don’t pay it off in full, remortgage. Call a free broker, I work at one if you’d like the name and it’s all digital, and get yourself off of SVR. Rates are around 5% at the minute, but even if you get a 2 year fixed you’ll be better off than you are now
Best way in my view to proceed is the lowest risk. In my eyes, I would await the outcome of the new job and make decisions based on that.
Best way in my view to proceed is the lowest risk. In my eyes, I would await the outcome of the new job and make decisions based on that.
I would do option B especially since the SVR is so high
This is also lower ongoing monthly expenses and will lower the stress while you look for a new job.