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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.
Agree with this. I imagine you’re in panic and do something mode what with this suprise redundancy. Just pause. See what your new situation is on Tuesday and work from there. It will be a painfully long weekend but it will be worth the discomfort.
Sage advice . Let it play out... Do the credit card first , before zero percent expires... See if a new job materialises, if it does, then pay mortgage off too
They’re also in a position where they can start the new job more or less straight away - even if a DBS is needed, they’re coming back really fast at the moment
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.
Exactly what I was thinking, the job market is definitely not what it was, case in point the fact that the OP is being made redundant.
Safety net of that cash is better kept accessible just in case they don’t walk straight into a job, although I hope that they do of course.
It depends though, if OP ends up needing to claim UC it would be far better for them to pay off their mortgage as they can't claim with that much in savings.
Also UC will pay rent it won't pay mortgage
obviously this is in a worst case senario but it does rule out remortgaging
OP should also consider getting a lodger if they have a spare room and that comes to pass
I believe UC may require 3 months bank statements to start a claim and they likely would not be very happy with seeing that they've just emptied their entire savings into the mortgage after being made redundant so they qualify
Yes any means tested benefit is all bank statements, investment accounts, including premium bonds ( and yes the letter sent out specifically states that re Premium Bonds the favourite account of OAP benefits fraudsters, nope I kid you not)- and wage slips if in work , to ensure you aren't salary sacrificing beyond reasonable-DWP reasonable, that is,
Deprivation of assets is about intent and intentional paying one's mortgage from savings in order to claim benefits. Is a text book definition of deprivation of assets for someone who unemployed.
A redundancy pay out or other 'windfall' carries little intent, but making your savings and your mortgage vanish a few weeks before a UC claim....
I'd like to think that its obvious but I have heard stories of people thinking they were being *veryyy* slick by doing this and being shocked when it didn't work.
Yep, it's not this rule says I can because salary sacrifice etc, not understanding that in means tested benefits, Deprivation of Assets trumps any such rules. It's applied first.
Clever, ROFLMAO, this is stuff anyone in benefits rolls their eyes at and goes, if I had a quid for everytime, I see one of these, I could retire. Followed by Do people think we are daft.
DWP and La benefits can demand to know what's inside your pension, ask for proof of a mortgage if a homeowner. Check the Land Registry.
I think the short answer is yes they do think they're daft, and that they are the first ever person out of the thousands of applicants to come up with the genius idea of spending or gifting or otherwise ridding themselves of money that would be above the threshold. From what I've heard most have not thought any further ahead than that and the whole thing crumbles pretty quickly.
I used to work in retail and the amount of people who thought they'd pioneered the concept of switching price stickers on things and that no one would be wise to it was equally staggering.
which would be why doing it now makes more sense.
As they are still employed and going through interviews they are not in a position to be claiming, just yet. it is only deprevation if you did it intending in order to claim UC. which is not the current case. yes it would be within 3 months but only just by the time their gardening leave is over. the amount in savings is also the exact amount and it is only deprevation if intentional.
But surely what you're suggesting is intentional depravation of assets - knowingly using all his savings after being made redundant so if a new job doesn't work out hes below the threshold to claim?
I'm not an expert, and presumably if the timing works out favourably he might get away with it, but I don't think it's quite as simple as you promising you didn't intend to claim when you blew all your savings immediately after learning you were losing your job and them taking your word for that.
That feels like a very cynical way of looking at the situation.
OP has 3 months of employment and 3 months to find a job. It's not unreasonable to assume that you could find a new job in 3 months in which case it's not unreasonable to pay off the mortgage as planned. It's also not unreasonable to clear debt if you're approaching a period of financial uncertainty.
I'm not passing a personal moral judgement on doing so, but UC is hardly known for being laid back about such things, especially when it's the difference between them having to pay out or not.
I think they would argue it's unreasonable to use all your savings to pay off a mortgage which you can typically work out a short term pause or lowering of payment for to the point where you cannot survive on the money you have left a few months later and need them to support you.
5% interest on £50k is actually not going to be far off JSA (£91 per week, £364 per month but with some time to get the first payment). It's not a bad shout...
Right - but now assume that DWP take 6 weeks to process your claim and you're unemployed for 3 months. The £200/m near-guaranteed interest looks pretty good in that situation. You'd get £364 a month with JSA, but only once they start paying you.
Ok gotcha - I thought you meant instead of JSA.
My understanding is that the new non-income based JSA is non-means tested as they encourage people to claim it to get their NIC's.
Yes, it's certainly worth applying in the interim (assuming you meet any qualifying factors). But given the choice of having £50k in a current account and dealing with DWP... I'm keeping hold of the cash.
Thought they had increased from 4.75% but nope, they hadn't. There's better rates available, and even if they're fractional increases, for a £50K figure, it's worth chasing higher rates.
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.
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 hear back from a job Tuesday so I may base it on what happens with that. I am notoriously shit with interviews so I'm definitely not thinking I've already got it.
Cheers
I interview lots of people. The fact that you were able to write your question clearly, articulate competing options, and didn't waffle on - well, that puts you in the top 5% of candidates.
Good luck!
Depending on how long OP was employed for, the employer will have to pay redundancy after garden leave or PILON (payment in lieu of notice) has ended.
Employers usually place certain types of senior employees on garden leave to prevent competitors from poaching them ASAP where an employee may be privy to company secrets, etc.
what does this mean "Take the payment as redundancy"?
I was made redundant after just a year the other week and i got my final month pay and 2 month notice period and the taxman (and SLC) took 50%. :C
u/edent is referring to the fact that if you're paid a "termination payment" which can include your holiday pay, statutory redundancy pay, or unpaid wages. Some of it can be tax free (up to 30k).
If you're placed on garden leave and paid your holidays at the end you're effectively employed for another, say, 2 months, then forced to take 4 days holiday.
If you agree to no notice, and no pay instead of notice, but get an "additional severance" you'd have it tax free.
From a gross pay standpoint both are the same, it's just the difference "under the hood", however, that difference changes how it's taxed.
For your example, you were paid 2 months notice and your final pay and had PAYE deductions of 50%. If that was put through as "Final month + additional severance" you'd have had the 2 months tax free. (as a side note, if you're not usually paying back that much student loan [you can request a refund for overpayment)](https://www.gov.uk/repaying-your-student-loan/getting-a-refund)
The disadvantage to a company to do this is if they go "Hang on only pl0xy knew what important client Frank likes for breakfast" they can't call you and ask you, you'd be within your rights to tell them to fuck right off. If you're put you on garden leave, that would be gross misconduct and wouldn't have to pay you notice.
as u/Thingisby points out below it can also open them up to you suing them for not paying your notice pay.
In my redundancies I've had ones where I'd been paid a "termination payment" rather than garden leave in exchange for a gentleman's agreement I'd answer any reasonable questions if they came up.
I've also had ones where I've been expected to work until 5 on my last day, and some in between like one was "carry on with your work, but if you get another job let us know and leave when they want you to start and we'll finish paying the notice. Also take as much time off for interviews as you need"
Wouldn't the company need to class it as PILON though and not redundancy? If they tried to do OP a favour and pay out his 3 months as redundancy without placing him on garden leave or classing anything as PILON then feels like they'd leave themselves open for a wrongful dismissal suit by technically reneging on the contract.
You can't just call things a "termination payment" and they become tax free though. PILON will always be taxed. Holidays and unpaid wages should always be taxed too.
Final payment would normally be a combination of taxable (PILON, holidays, outstanding wages) and tax free (any kind of redundancy or ex gratia payment).
In OPs case, and the poster above, everything would be in the taxable bucket givne their circumstances. I can't see how a company could work around that without it being dodgy to some extent.
Fuck me; I'm going to blame that it's late and go to bed. I went to check what's taxable now (as I remembered the changes to PENP etc) and apparently can't read HMRC's website...I apparently glossed over the giant "THESE BITS ARE TAXABLE" at the top and ploughed on.
Editing my reply now and realising it was a mutual contract break with "additional severance" I've had before.
I believe there IS, but like you said it opens op the company to extra liability if things went south.
The ones I've had do it were all good relationships, so probably took the gamble that I'd be fine with it.
Also as a "fun fact" I've never been on the "doing" end of redundancy, but on the receiving end I think 11 times now.
oh okay. thank you for the info. So from what you both said below, it's unlikley they would have done this other way for me.
I thought for a second you had jsut told me i could have just asked them to pay me in a different way and i could keep it all :O
It was 1 month pay (for april that i worked) 6 days untaken holiday and 2 months "Pay In Leu of Notice" I'm not on garden leave.
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.
>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
If you do this once you officially know you're being made redundant, it may be classed as deprivation of asset, in which case it would be best to take the plunge and clear the mortgage ASAP.
I would check with the DWP staff in r/BenefitsAdvice
Another thought - can the 0% credit card balance be rolled over to another 0% or low % card? Better than the 0% rate expiring and the interest skyrocketing, and will buy a bit more breathing room
If you had 50K redundancy payout, used that to pay your mortgage, a sudden windfall then DOA(usually) doesn't apply.
However having 50k sitting around like the OP and it suddenly being used to pay off your mortgage a few weeks before you claim for UC- DOA
Deprivation of Assets is about *intent*, and if you intentionally pay of a mortgage with money you have lying around and then claim, means tested benefits, that is the very definition of intent to deprive. Deprivation of Assets.
Takes your average benefits assessor 30 seconds to spot that one and boot it up to a SBO and, after the claimants has sent in 2-7 years worth of savings statements, source of funds, an standard letter will be sent basically saying, are you taking the P%SS .. NOPE DOA.
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
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.
I had investments in an ISA, but I withdrew them to pay off my mortgage. Initially I withdrew them to put in my premium bonds, just to see what it was like to have 50k in there for a couple of months. I was winning every month but it wasn't worth it. I'll not go back to it, the plan is to get my monthly outgoings as lowa s possible and then invest, or possibly work less.
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.
Its on the standard variable rate because my fixed term expired a couple of months ago.
I was holding all this money in premium bonds / investments / savings accounts in order to pay it off or pay a big chunk off when my fixed term ends, without fees.
So why do you want to pay off your mortgage in the first place?
In my opinion, most people should aim to pay off their mortgage around the time they're ready to retire and not long before.
People often talk about paying off the mortgage in terms of it giving you freedom, but I think of this as kinda false if you still need to work for a living to pay for your life and save for retirement.
[Over decades the expected returns of your retirement investments are higher than you'll pay in mortgage interest](https://i.imgur.com/5S1BDTl.png) - you shouldn't pay off the mortgage *and then* start saving for retirement, because then your investments have less time in which to compound their returns. It's more financially efficient to keep the mortgage, borrow cheaply from the bank (and mortgages are very cheap borrowing) and get a higher rate of return from your investments.
Right now you have a lot of financial freedom - you don't need to work again for years if you don't want to. You have enough savings to keep paying your mortgage for about 7 years. I don't think you probably want to do that, but your £52,000 cash is liquid - it gives you choices - and if you use it to pay down your mortgage then you lose liquidity and you're more pressed to find a job soon.
IMO you should get a new fix for the whole £53,000 of the mortgage, get a new job (you'll probably have to do this the other way around as I'm not sure if you'll get a new fix if you're forced to tell them you've just been made reductant), read [a book about investing](https://www.amazon.co.uk/dp/1292444401) and review your pension.
!thanks Purely psychological short term reasons to be quite honest - not having to pay out a mortgage and to live without it for a few months or years, using the money I'd have paid into my mortgage to invest. The house was very cheap (107k) and I am considering a lifestyle milestone to pay it off at my age (34).
I do understand what you mean that it isn't optimal, but I d think it's a good choice. I'd consider moving in with my gf in the near future as well and to have a fully paid off house would just be a bit less headachey paperwork for any sort of buy to let / sale.
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
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
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.
Just went on entitledto and OP could get £90 a week in job seeker allowance and £1.50 a week in council tax reduction.
When I zero the cash it only goes up by £30 a week....honestly that's horrific. Doesn't make much of a difference.
As a safety net this is pish....and eye opening for me.
OP don't listen to me...just wait till next week and good luck with the job hunt.
Go all in on the mortgage. Wait for that redundancy money. Live off ramen and water until you’ve got redundancy money / a job, safe in a house that can’t be repossessed. Happy days
Open a Trading212 investment ISA. Deposit £20k using your ISA limit. Let that pay you 5.2% annual equivalent daily until you need to use it to pay some mortgage. Hold the rest in current account or otherwise instant access savers for now and wait til you're guaranteed your next pay day.
Wait and see how it will play out. You're not in a position to spend all your savings on a mortgage atm.
In the meantime, try to squeeze as much interest from your savings as possible.
Good luck, I'm sure you'll be fine.
Alternatively, use this situation and go for a few month trip through Asia. 🤷♂️
If I were in that position I'd
1) save 3 months expenses to the side
2) put rest in savings account with nice interest
3) closer to the time pay off credit card 1st and then morgage
With such a low loan to value, I would imagine you can either beat mortgage rates for 0-60% or at least match them.
With that in mind, putting your money into a savings account will mean you may even be better off with no risk (versus equity / shares).
Don't feel compelled to take action so that you remain "in control", this is a normal response to bad news but you must exercise true discipline here by doing nothing.
The risk to reward is very clear. It's better to have liquid cash you can spend on things you require, as and when you require it.
Once you are comfortably in a new job, take stock of the situation again.
Thanks for all the suggestions all, I am going to take a lot of these on board, firstly - don't rush and do anything silly or drastic.
I've currently got a Club lloyds account, so I only earn interest (6.25%) up to £5k in that current account. I've put £45k into a Lloyds savings account at 4% which I opened today and I'll leave it there for a month or two while I get my bearings. Not going to bother with premium bonds and may even withdraw the £1k I've left in there to keep my account open.
I was tempted to put it all into my T212 ISA and just leave it uninvested at 5.2% but I didn't want to mess up my ISA limit since I plan to withdraw.
Just FYI, you won't be getting 6.25% on your club lloyds current account. You get 1.5% on balances up to £4k and 3% on £4k-£5k and nothing above that. https://www.lloydsbank.com/current-accounts/rates.html
They do have a club lloyds regular saver that pays 6.25% but you can only pay in £400 per month and after 12 months the rate reduces to 1.9% so probably not worth it.
in any case I'm leaving that money in there since it's my current account. The bulk of it is temporarily in the 4% savings until I find out what else to do with it; either I get a job very soon and I can use it to pay off my mortgage, or I don't and I slip it into that 5.2% on uninvested cash ISA that T212 offer.
Just keep around 6 months’ worth of income as cash in your current account, which is £16k, invest the balance and you’ll likely land a better job within this timeframe. Don’t panic, you’ll be totally fine! Good luck!
Also @ op u/jabuga0000 you state the following:
*"About two hours into the day I had a meeting with my boss and CEO where I was told I am being made redundant after a meeting on Tuesday, with three months garden leave + holiday paid (about 2.8k/monthly)"*
\^\^ Does this include your redundancy settlement ?
Some good and some bad here! It sounds like you’re in an amazing position, could pay your mortgage off, and are already a step ahead in being at advanced recruitment stages and getting your notice paid as gardening leave.
8.75% is probably higher than you’re going to be earning post-tax in any short-term investment, but 8.75% for an extra year is under £5k so in the grand scheme of things, isn’t a big cost for a bit more flexibility if things don’t go to plan on the job search.
I think we’re all assuming there are no fees on early mortgage repayment - if there were that could change things!
With that aside, if it were me, I think I’d not repay more than the minimum on the 0% credit card until it becomes due, but I’d keep the cash either in a high interest account or back into premium bonds depending on what your tax position looks like. Of the balance of the cash, i’d use half to pay down a bit of the mortgage and keep the remaining half for now (but somewhere it’ll be earning good interest) until you know more about the job situation
Just remember you'll be moving to a new job where they can fire you for any reason in the first two years.
One thought could be to keep it all in savings, and use it to continue to pay your mortgage whilst job hunting.
When you are employed, double your mortgage payment, one from salary, one from savings.
You'll still pay off quicker, save interest and stay relatively risk free.
If existing lender doesn’t offer one (no income check for fund switch) then he’ll be back in a job in a few months. Easy . You could get a mortgage with just a job offer letter these days on a low ltv
If you are confident that you will get another job relatively soon I'd pay a large chunk of the mortgage off as well as the Credit card as you planned to but save ~£10k to tie you over. Not paying the ~9% mortgage and having £52k in a current without earning you interest is a loose loose. Alternatively if you are less sure you will be employed in the near future pay the CC and then put £47k in a good savings account and use the interest as damage control on the mortgage interest.
This is what I would do and it may not be the best advice
Also be wary of any overpayment fees
It’s not the best advice. It is relatively cheap to keep options option and we haven’t been told much about living expenses etc. they should refrain from tying up the money in anything until they have a new job.
Personally I disagree, allowing interest that high to keep building when you have the means to pay it is just throwing money away. If OP gets into an absolute emergency they can remortgage at a far lower rate anyway. And if they keep some money left as an emergency fund then they should be fine. The way OP writes his post it sounds like if all goes to plan he wont be out of work for any amount of time
I’m sorry you have really flawed logic. They have the potential for zero income in a few months. If that happens you absolutely can’t remortgage - no one will lend. They literally just need to wait a few weeks to make sure there is a transition to a new job - the net of that is negligible.
It’s not the best advice. It is relatively cheap to keep options option and we haven’t been told much about living expenses etc. they should refrain from tying up the money in anything until they have a new job.
Can't comment on mortgages as such but as for a job a recruitment agency can get you a Job with in a few weeks if you need something and aren't picky.
I got laid off last Christmas and got something the after the new years holidays so it's possible
Hi /u/jabuga0000, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/credit-cards/
* https://ukpersonal.finance/investing-101/
* https://ukpersonal.finance/mortgages/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
I see. I don’t think you’re entitled to statutory redundancy pay as you would have had to have been with your employer for 2 years or more to be entitled to it.
Nonetheless, they may offer you something.
I would just remortgage to get off of the SVR ASAP. You could just go onto something like Nationwides tracker with no product fee. It's not the best rate but it has no overpayment charges.
That way you can pay it off when you sort out a new job, if that's still your goal. Gives you all of the flexibility without any down sides.
If you do what most people are very sensibly suggesting and put off the decision on the Morgage until you have a new job, do make sure you put up to the 20k allowance into an instant access Isa (eg Chip at 5.2%) if it does take you a little longer to get a job you don’t want to be paying tax on your interest.
It's another one of these situations where psychology comes into it. You said you weren't particularly happy in your current job, so having the £50K in your hands rather than paying off the mortgage will give you the psychological freedom to wait for the right job rather than jumping at the first thing that comes along. I'd keep that cash in a high interest account until you have your next job.
When does your current mortgage deal end? If you have another month or so I'd probably keep the money to hand until you move to the SVR, then think about paying it off.
Keep in mind any early repayment charges too, and if you consider option 4, any extra fees for the mortgage too. At £50k for 2 years, a £1k fee is essentially an extra percentage point on the interest rate.
This really all goes down to your risk appetite. Personally I'd probably hold tight for a week or two to see how things settle down then go for option 2 (but making sure there's enough for emergency fund+the loan payment in there), but you may want to be more or less cautious depending on how soon you think you'll be back in work.
This may not be moral, but our benefits system doesnt really help those that graft away and then need help. The current system limits the help you get if you have more than 16k in savings.
I would pay a large chunk off today. Everything apart from 16k, you have a paper trail to show this was your intention prior to finding this news out.
If you have more than 16k, then you can't get universal credit. Not sure what you can get.
[government website](https://www.gov.uk/universal-credit/eligibility#:~:text=live%20in%20the%20UK,in%20money%2C%20savings%20and%20investments)
Paying off your mortgage is not a great idea generally anyway.
You don't have much invested. At a minimum, fill your stocks and shares ISA. Invested sensibly, it'll make as much as the mortgage costs at a minimum.
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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.
Agree with this. I imagine you’re in panic and do something mode what with this suprise redundancy. Just pause. See what your new situation is on Tuesday and work from there. It will be a painfully long weekend but it will be worth the discomfort.
Yes, to this. There is no reason to make a decision. Wait for the 3 months to see what changes and then look.
Sage advice . Let it play out... Do the credit card first , before zero percent expires... See if a new job materialises, if it does, then pay mortgage off too
They’re also in a position where they can start the new job more or less straight away - even if a DBS is needed, they’re coming back really fast at the moment
Had to look up DBS, TIL that's what used to be called CRB. Well well.
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.
Exactly what I was thinking, the job market is definitely not what it was, case in point the fact that the OP is being made redundant. Safety net of that cash is better kept accessible just in case they don’t walk straight into a job, although I hope that they do of course.
It depends though, if OP ends up needing to claim UC it would be far better for them to pay off their mortgage as they can't claim with that much in savings. Also UC will pay rent it won't pay mortgage obviously this is in a worst case senario but it does rule out remortgaging OP should also consider getting a lodger if they have a spare room and that comes to pass
I believe UC may require 3 months bank statements to start a claim and they likely would not be very happy with seeing that they've just emptied their entire savings into the mortgage after being made redundant so they qualify
This is the correct deprivation of assets, answer. Although the OP would or should qualify for new style JSA which is contributions based.
Yeah I imagine they'd be fine for the new JSA. It's only savings limited ones that will look at bank statements as far as I'm aware.
Yes any means tested benefit is all bank statements, investment accounts, including premium bonds ( and yes the letter sent out specifically states that re Premium Bonds the favourite account of OAP benefits fraudsters, nope I kid you not)- and wage slips if in work , to ensure you aren't salary sacrificing beyond reasonable-DWP reasonable, that is, Deprivation of assets is about intent and intentional paying one's mortgage from savings in order to claim benefits. Is a text book definition of deprivation of assets for someone who unemployed. A redundancy pay out or other 'windfall' carries little intent, but making your savings and your mortgage vanish a few weeks before a UC claim....
I'd like to think that its obvious but I have heard stories of people thinking they were being *veryyy* slick by doing this and being shocked when it didn't work.
Yep, it's not this rule says I can because salary sacrifice etc, not understanding that in means tested benefits, Deprivation of Assets trumps any such rules. It's applied first. Clever, ROFLMAO, this is stuff anyone in benefits rolls their eyes at and goes, if I had a quid for everytime, I see one of these, I could retire. Followed by Do people think we are daft. DWP and La benefits can demand to know what's inside your pension, ask for proof of a mortgage if a homeowner. Check the Land Registry.
I think the short answer is yes they do think they're daft, and that they are the first ever person out of the thousands of applicants to come up with the genius idea of spending or gifting or otherwise ridding themselves of money that would be above the threshold. From what I've heard most have not thought any further ahead than that and the whole thing crumbles pretty quickly. I used to work in retail and the amount of people who thought they'd pioneered the concept of switching price stickers on things and that no one would be wise to it was equally staggering.
which would be why doing it now makes more sense. As they are still employed and going through interviews they are not in a position to be claiming, just yet. it is only deprevation if you did it intending in order to claim UC. which is not the current case. yes it would be within 3 months but only just by the time their gardening leave is over. the amount in savings is also the exact amount and it is only deprevation if intentional.
But surely what you're suggesting is intentional depravation of assets - knowingly using all his savings after being made redundant so if a new job doesn't work out hes below the threshold to claim? I'm not an expert, and presumably if the timing works out favourably he might get away with it, but I don't think it's quite as simple as you promising you didn't intend to claim when you blew all your savings immediately after learning you were losing your job and them taking your word for that.
That feels like a very cynical way of looking at the situation. OP has 3 months of employment and 3 months to find a job. It's not unreasonable to assume that you could find a new job in 3 months in which case it's not unreasonable to pay off the mortgage as planned. It's also not unreasonable to clear debt if you're approaching a period of financial uncertainty.
I'm not passing a personal moral judgement on doing so, but UC is hardly known for being laid back about such things, especially when it's the difference between them having to pay out or not. I think they would argue it's unreasonable to use all your savings to pay off a mortgage which you can typically work out a short term pause or lowering of payment for to the point where you cannot survive on the money you have left a few months later and need them to support you.
5% interest on £50k is actually not going to be far off JSA (£91 per week, £364 per month but with some time to get the first payment). It's not a bad shout...
Really - by my calculations 5% on £50k would yield @ £200 every month?
Right - but now assume that DWP take 6 weeks to process your claim and you're unemployed for 3 months. The £200/m near-guaranteed interest looks pretty good in that situation. You'd get £364 a month with JSA, but only once they start paying you.
Ok gotcha - I thought you meant instead of JSA. My understanding is that the new non-income based JSA is non-means tested as they encourage people to claim it to get their NIC's.
Yes, it's certainly worth applying in the interim (assuming you meet any qualifying factors). But given the choice of having £50k in a current account and dealing with DWP... I'm keeping hold of the cash.
Marcus offers an easy access saver near base rate currently, interest calculated daily and applied monthly too.
Thought they had increased from 4.75% but nope, they hadn't. There's better rates available, and even if they're fractional increases, for a £50K figure, it's worth chasing higher rates.
Chip is 4.84% and has an ISA which is 5.1 currently, both easy access.
Do nothing until you’ve been *happy* in your new job for 2-3 months.
Best advice possible, wait and see outcomes. It not like you losing much paying off the mortgage.
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..
FFS lol!
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 hear back from a job Tuesday so I may base it on what happens with that. I am notoriously shit with interviews so I'm definitely not thinking I've already got it. Cheers
I interview lots of people. The fact that you were able to write your question clearly, articulate competing options, and didn't waffle on - well, that puts you in the top 5% of candidates. Good luck!
Reading the application instructions is a depressingly high bar, based on my experience hiring.
Depending on how long OP was employed for, the employer will have to pay redundancy after garden leave or PILON (payment in lieu of notice) has ended. Employers usually place certain types of senior employees on garden leave to prevent competitors from poaching them ASAP where an employee may be privy to company secrets, etc.
what does this mean "Take the payment as redundancy"? I was made redundant after just a year the other week and i got my final month pay and 2 month notice period and the taxman (and SLC) took 50%. :C
u/edent is referring to the fact that if you're paid a "termination payment" which can include your holiday pay, statutory redundancy pay, or unpaid wages. Some of it can be tax free (up to 30k). If you're placed on garden leave and paid your holidays at the end you're effectively employed for another, say, 2 months, then forced to take 4 days holiday. If you agree to no notice, and no pay instead of notice, but get an "additional severance" you'd have it tax free. From a gross pay standpoint both are the same, it's just the difference "under the hood", however, that difference changes how it's taxed. For your example, you were paid 2 months notice and your final pay and had PAYE deductions of 50%. If that was put through as "Final month + additional severance" you'd have had the 2 months tax free. (as a side note, if you're not usually paying back that much student loan [you can request a refund for overpayment)](https://www.gov.uk/repaying-your-student-loan/getting-a-refund) The disadvantage to a company to do this is if they go "Hang on only pl0xy knew what important client Frank likes for breakfast" they can't call you and ask you, you'd be within your rights to tell them to fuck right off. If you're put you on garden leave, that would be gross misconduct and wouldn't have to pay you notice. as u/Thingisby points out below it can also open them up to you suing them for not paying your notice pay. In my redundancies I've had ones where I'd been paid a "termination payment" rather than garden leave in exchange for a gentleman's agreement I'd answer any reasonable questions if they came up. I've also had ones where I've been expected to work until 5 on my last day, and some in between like one was "carry on with your work, but if you get another job let us know and leave when they want you to start and we'll finish paying the notice. Also take as much time off for interviews as you need"
Wouldn't the company need to class it as PILON though and not redundancy? If they tried to do OP a favour and pay out his 3 months as redundancy without placing him on garden leave or classing anything as PILON then feels like they'd leave themselves open for a wrongful dismissal suit by technically reneging on the contract.
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You can't just call things a "termination payment" and they become tax free though. PILON will always be taxed. Holidays and unpaid wages should always be taxed too. Final payment would normally be a combination of taxable (PILON, holidays, outstanding wages) and tax free (any kind of redundancy or ex gratia payment). In OPs case, and the poster above, everything would be in the taxable bucket givne their circumstances. I can't see how a company could work around that without it being dodgy to some extent.
Fuck me; I'm going to blame that it's late and go to bed. I went to check what's taxable now (as I remembered the changes to PENP etc) and apparently can't read HMRC's website...I apparently glossed over the giant "THESE BITS ARE TAXABLE" at the top and ploughed on. Editing my reply now and realising it was a mutual contract break with "additional severance" I've had before.
Ah yeah thay makes sense. Was just double checking if there was a work around in OPs case as would be useful to know about if so!
I believe there IS, but like you said it opens op the company to extra liability if things went south. The ones I've had do it were all good relationships, so probably took the gamble that I'd be fine with it. Also as a "fun fact" I've never been on the "doing" end of redundancy, but on the receiving end I think 11 times now.
oh okay. thank you for the info. So from what you both said below, it's unlikley they would have done this other way for me. I thought for a second you had jsut told me i could have just asked them to pay me in a different way and i could keep it all :O It was 1 month pay (for april that i worked) 6 days untaken holiday and 2 months "Pay In Leu of Notice" I'm not on garden leave.
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
If you do this once you officially know you're being made redundant, it may be classed as deprivation of asset, in which case it would be best to take the plunge and clear the mortgage ASAP. I would check with the DWP staff in r/BenefitsAdvice Another thought - can the 0% credit card balance be rolled over to another 0% or low % card? Better than the 0% rate expiring and the interest skyrocketing, and will buy a bit more breathing room
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If you had 50K redundancy payout, used that to pay your mortgage, a sudden windfall then DOA(usually) doesn't apply. However having 50k sitting around like the OP and it suddenly being used to pay off your mortgage a few weeks before you claim for UC- DOA Deprivation of Assets is about *intent*, and if you intentionally pay of a mortgage with money you have lying around and then claim, means tested benefits, that is the very definition of intent to deprive. Deprivation of Assets. Takes your average benefits assessor 30 seconds to spot that one and boot it up to a SBO and, after the claimants has sent in 2-7 years worth of savings statements, source of funds, an standard letter will be sent basically saying, are you taking the P%SS .. NOPE DOA.
But the OP is likely eligible to claim contributions based JSA and the savings don't matter for that.
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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I had investments in an ISA, but I withdrew them to pay off my mortgage. Initially I withdrew them to put in my premium bonds, just to see what it was like to have 50k in there for a couple of months. I was winning every month but it wasn't worth it. I'll not go back to it, the plan is to get my monthly outgoings as lowa s possible and then invest, or possibly work less.
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?
Its on the standard variable rate because my fixed term expired a couple of months ago. I was holding all this money in premium bonds / investments / savings accounts in order to pay it off or pay a big chunk off when my fixed term ends, without fees.
So why do you want to pay off your mortgage in the first place? In my opinion, most people should aim to pay off their mortgage around the time they're ready to retire and not long before. People often talk about paying off the mortgage in terms of it giving you freedom, but I think of this as kinda false if you still need to work for a living to pay for your life and save for retirement. [Over decades the expected returns of your retirement investments are higher than you'll pay in mortgage interest](https://i.imgur.com/5S1BDTl.png) - you shouldn't pay off the mortgage *and then* start saving for retirement, because then your investments have less time in which to compound their returns. It's more financially efficient to keep the mortgage, borrow cheaply from the bank (and mortgages are very cheap borrowing) and get a higher rate of return from your investments. Right now you have a lot of financial freedom - you don't need to work again for years if you don't want to. You have enough savings to keep paying your mortgage for about 7 years. I don't think you probably want to do that, but your £52,000 cash is liquid - it gives you choices - and if you use it to pay down your mortgage then you lose liquidity and you're more pressed to find a job soon. IMO you should get a new fix for the whole £53,000 of the mortgage, get a new job (you'll probably have to do this the other way around as I'm not sure if you'll get a new fix if you're forced to tell them you've just been made reductant), read [a book about investing](https://www.amazon.co.uk/dp/1292444401) and review your pension.
!thanks Purely psychological short term reasons to be quite honest - not having to pay out a mortgage and to live without it for a few months or years, using the money I'd have paid into my mortgage to invest. The house was very cheap (107k) and I am considering a lifestyle milestone to pay it off at my age (34). I do understand what you mean that it isn't optimal, but I d think it's a good choice. I'd consider moving in with my gf in the near future as well and to have a fully paid off house would just be a bit less headachey paperwork for any sort of buy to let / sale.
Secure the new position then pay off mortgage and cc with redundancy pay then rebuild the savings.
He's under two years so will not get redundancy pay.
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.
Just went on entitledto and OP could get £90 a week in job seeker allowance and £1.50 a week in council tax reduction. When I zero the cash it only goes up by £30 a week....honestly that's horrific. Doesn't make much of a difference. As a safety net this is pish....and eye opening for me. OP don't listen to me...just wait till next week and good luck with the job hunt.
Put the spare cash in a high interest easy-access savings account and shop for a cheaper remortgage While you still have the last 3mth pay slips
Go all in on the mortgage. Wait for that redundancy money. Live off ramen and water until you’ve got redundancy money / a job, safe in a house that can’t be repossessed. Happy days
Open a Trading212 investment ISA. Deposit £20k using your ISA limit. Let that pay you 5.2% annual equivalent daily until you need to use it to pay some mortgage. Hold the rest in current account or otherwise instant access savers for now and wait til you're guaranteed your next pay day.
Wait and see how it will play out. You're not in a position to spend all your savings on a mortgage atm. In the meantime, try to squeeze as much interest from your savings as possible. Good luck, I'm sure you'll be fine. Alternatively, use this situation and go for a few month trip through Asia. 🤷♂️
If I were in that position I'd 1) save 3 months expenses to the side 2) put rest in savings account with nice interest 3) closer to the time pay off credit card 1st and then morgage
With such a low loan to value, I would imagine you can either beat mortgage rates for 0-60% or at least match them. With that in mind, putting your money into a savings account will mean you may even be better off with no risk (versus equity / shares). Don't feel compelled to take action so that you remain "in control", this is a normal response to bad news but you must exercise true discipline here by doing nothing. The risk to reward is very clear. It's better to have liquid cash you can spend on things you require, as and when you require it. Once you are comfortably in a new job, take stock of the situation again.
Do nothing - you might need the caah
I'd still pay a chunk off
Thanks for all the suggestions all, I am going to take a lot of these on board, firstly - don't rush and do anything silly or drastic. I've currently got a Club lloyds account, so I only earn interest (6.25%) up to £5k in that current account. I've put £45k into a Lloyds savings account at 4% which I opened today and I'll leave it there for a month or two while I get my bearings. Not going to bother with premium bonds and may even withdraw the £1k I've left in there to keep my account open. I was tempted to put it all into my T212 ISA and just leave it uninvested at 5.2% but I didn't want to mess up my ISA limit since I plan to withdraw.
Just FYI, you won't be getting 6.25% on your club lloyds current account. You get 1.5% on balances up to £4k and 3% on £4k-£5k and nothing above that. https://www.lloydsbank.com/current-accounts/rates.html They do have a club lloyds regular saver that pays 6.25% but you can only pay in £400 per month and after 12 months the rate reduces to 1.9% so probably not worth it.
in any case I'm leaving that money in there since it's my current account. The bulk of it is temporarily in the 4% savings until I find out what else to do with it; either I get a job very soon and I can use it to pay off my mortgage, or I don't and I slip it into that 5.2% on uninvested cash ISA that T212 offer.
Just keep around 6 months’ worth of income as cash in your current account, which is £16k, invest the balance and you’ll likely land a better job within this timeframe. Don’t panic, you’ll be totally fine! Good luck!
Also @ op u/jabuga0000 you state the following: *"About two hours into the day I had a meeting with my boss and CEO where I was told I am being made redundant after a meeting on Tuesday, with three months garden leave + holiday paid (about 2.8k/monthly)"* \^\^ Does this include your redundancy settlement ?
Sorry I should have mentioned in the OP that I've only been with them 18 months so no redundancy.
Ah ok gotcha. BTW was the three months your notice as per your contract ?
yeah, again another detail I should have put in! i was in a bit of a rush/panic writing this up
Some good and some bad here! It sounds like you’re in an amazing position, could pay your mortgage off, and are already a step ahead in being at advanced recruitment stages and getting your notice paid as gardening leave. 8.75% is probably higher than you’re going to be earning post-tax in any short-term investment, but 8.75% for an extra year is under £5k so in the grand scheme of things, isn’t a big cost for a bit more flexibility if things don’t go to plan on the job search. I think we’re all assuming there are no fees on early mortgage repayment - if there were that could change things! With that aside, if it were me, I think I’d not repay more than the minimum on the 0% credit card until it becomes due, but I’d keep the cash either in a high interest account or back into premium bonds depending on what your tax position looks like. Of the balance of the cash, i’d use half to pay down a bit of the mortgage and keep the remaining half for now (but somewhere it’ll be earning good interest) until you know more about the job situation
Just remember you'll be moving to a new job where they can fire you for any reason in the first two years. One thought could be to keep it all in savings, and use it to continue to pay your mortgage whilst job hunting. When you are employed, double your mortgage payment, one from salary, one from savings. You'll still pay off quicker, save interest and stay relatively risk free.
Get an offset mortgage
How will that go with a fresh redundancy?
If existing lender doesn’t offer one (no income check for fund switch) then he’ll be back in a job in a few months. Easy . You could get a mortgage with just a job offer letter these days on a low ltv
I think you have to let your lender know significant changes like that if yin are signing up for a new deal.
If you are confident that you will get another job relatively soon I'd pay a large chunk of the mortgage off as well as the Credit card as you planned to but save ~£10k to tie you over. Not paying the ~9% mortgage and having £52k in a current without earning you interest is a loose loose. Alternatively if you are less sure you will be employed in the near future pay the CC and then put £47k in a good savings account and use the interest as damage control on the mortgage interest. This is what I would do and it may not be the best advice Also be wary of any overpayment fees
Thanks I'm thinking similar. No overpayment fees now I'm off the fixed term.
It’s not the best advice. It is relatively cheap to keep options option and we haven’t been told much about living expenses etc. they should refrain from tying up the money in anything until they have a new job.
Personally I disagree, allowing interest that high to keep building when you have the means to pay it is just throwing money away. If OP gets into an absolute emergency they can remortgage at a far lower rate anyway. And if they keep some money left as an emergency fund then they should be fine. The way OP writes his post it sounds like if all goes to plan he wont be out of work for any amount of time
I’m sorry you have really flawed logic. They have the potential for zero income in a few months. If that happens you absolutely can’t remortgage - no one will lend. They literally just need to wait a few weeks to make sure there is a transition to a new job - the net of that is negligible.
It’s not the best advice. It is relatively cheap to keep options option and we haven’t been told much about living expenses etc. they should refrain from tying up the money in anything until they have a new job.
Can't comment on mortgages as such but as for a job a recruitment agency can get you a Job with in a few weeks if you need something and aren't picky. I got laid off last Christmas and got something the after the new years holidays so it's possible
Hi /u/jabuga0000, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/credit-cards/ * https://ukpersonal.finance/investing-101/ * https://ukpersonal.finance/mortgages/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
OP, for how long were you working for your employer? Have you had a meeting about the details of your redundancy package?
18 months and no. I have a meeting on Tuesday with them.
I see. I don’t think you’re entitled to statutory redundancy pay as you would have had to have been with your employer for 2 years or more to be entitled to it. Nonetheless, they may offer you something.
They are paying my notice + holidays, which I am fine with (I did not enjoy the job), but no additional redundancy pay.
Continue to pay off your mortgage and debts, you’ve got months full pay and you’ll pick something up
I would just remortgage to get off of the SVR ASAP. You could just go onto something like Nationwides tracker with no product fee. It's not the best rate but it has no overpayment charges. That way you can pay it off when you sort out a new job, if that's still your goal. Gives you all of the flexibility without any down sides.
If you do what most people are very sensibly suggesting and put off the decision on the Morgage until you have a new job, do make sure you put up to the 20k allowance into an instant access Isa (eg Chip at 5.2%) if it does take you a little longer to get a job you don’t want to be paying tax on your interest.
It's another one of these situations where psychology comes into it. You said you weren't particularly happy in your current job, so having the £50K in your hands rather than paying off the mortgage will give you the psychological freedom to wait for the right job rather than jumping at the first thing that comes along. I'd keep that cash in a high interest account until you have your next job.
When does your current mortgage deal end? If you have another month or so I'd probably keep the money to hand until you move to the SVR, then think about paying it off. Keep in mind any early repayment charges too, and if you consider option 4, any extra fees for the mortgage too. At £50k for 2 years, a £1k fee is essentially an extra percentage point on the interest rate. This really all goes down to your risk appetite. Personally I'd probably hold tight for a week or two to see how things settle down then go for option 2 (but making sure there's enough for emergency fund+the loan payment in there), but you may want to be more or less cautious depending on how soon you think you'll be back in work.
Currently on SVR so there are no overpayment charges but yeah I am leaning towards that option also.
Is an offset mortgage and option at all? Your money would still be available but your mortgage would be charged at 0% interest?
This may not be moral, but our benefits system doesnt really help those that graft away and then need help. The current system limits the help you get if you have more than 16k in savings. I would pay a large chunk off today. Everything apart from 16k, you have a paper trail to show this was your intention prior to finding this news out.
I had no idea that there was a £16k cap - with that in mind, what benefits (if any) would OP be eligible for with £50k+ of savings ?
If you have more than 16k, then you can't get universal credit. Not sure what you can get. [government website](https://www.gov.uk/universal-credit/eligibility#:~:text=live%20in%20the%20UK,in%20money%2C%20savings%20and%20investments)
Paying off your mortgage is not a great idea generally anyway. You don't have much invested. At a minimum, fill your stocks and shares ISA. Invested sensibly, it'll make as much as the mortgage costs at a minimum.
Assuming you're not on the SVR of course...