Should You Save, Invest or Pay off your Mortgage in 2024?

This video looks at how you should use your money in 2024? Save, Invest or Pay off your mortgage. It's a tough decision, what are you going to do?
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[@presterjohn71]

We paid the mortgage off. The security that gives you against change can't be underestimated.

[@TobyNewbatt]

Absolutely!!

[@carlyndolphin]

I have a mortgage but my money is working harder elsewhere.

[@stonecold9132]

Can't beat the relief I had when I paid my mortgage. Everything now is a bonus

[@carlyndolphin]

@@stonecold9132 my mortgage interest is 1%. My investments generate 9%. It’s a no brainer

[@dunz1908]

Issue for us is that tax related paying off the mortgage will put you in another bracket which means you'll pay more tax.. I think paying off a large amount would be worth it.. But paying it off full.. not good for my country. Happy it works for you tho!

[@cainsd1]

For us our priority was to pay the mortgage off, with a target by the time we were 45 which we achieved. At the same time we used the cheap interest rates over the last decade to take loans and completely do the house up completely. In March 2020 we hit all our goals and now are heavily investing through contributing into our work place pensions and S&S ISA's. We have zero debt and also as we have got older our income has peaked due to the natural career progression. The key thing now is not letting lifestyle creep come in as we have spare income, and invest it through our work place pensions utilising the tax benefits and company contributions. Fingers crossed our next target will be retirement at 55. However if it doesn't go to plan, we sleep easy knowing we will always have a roof above our head. For us the piece of mind and zero debt is priceless.

[@barnoluk9272]

Couldn’t agree more with this. I’m a couple of years behind you on the same road. Bet you sleep like babies these days!!!😅

[@user-ow2qv1co5s]

Nice plan

[@TobyNewbatt]

Love this story thank you for sharing and well done. Hope this inspires some others.

[@user-xu6nl6xc6t]

I’m debt free including home I love the weight lifted off me I don’t have to stress about making money and we now go on 4 holidays a year .

[@TobyNewbatt]

:)

[@Abdul_Rahman86]

I’m a simple man. Here’s my top tips to be rich. 1) I invest into a SIPP to protect my money from MYSELF!! 2) I SEE a Toby Newbatt video, I simply click. 3) I only drink in whether spoons. Happy new year

[@benjaminheginbotham7927]

Wetherspoons is the best pub chain, so why drink anywhere else?

[@Abdul_Rahman86]

@@benjaminheginbotham7927amen my brother. 3 bottles of beer for £5.00 (this is not alcohol advice). 😂😂

[@jackshar3152]

❤ this 💪

[@TobyNewbatt]

haha thanks Adbul hope you have a great year ahead :)

[@ianashelford]

I am trying to strike a balance between saving (for rainy day, planned repairs for car/house), investing and paying off the mortgage early. Hopfully attacking each equally all at the same time!

[@TobyNewbatt]

Keep up the good work Ian!

[@danmeck5978]

Same here. I don't know how best to distribute my spare money.

[@tridau]

Still investing each month but with remortgage approaching we are putting a small amount each month into a high interest savings account (rather than overpaying) in order to pay off a chunk at remortgage and get that loan to value ratio down. Makes sense to get 5% on the cash until that time rather than overpay mortgage at 1.6%. By keeping it out of the stock market we are guarding against short term market shifts around remortgage time.

[@valerienewbatt9678]

Happy New Year Toby. Great videos as always.

[@TobyNewbatt]

Happy new year!

[@TomsPersonalFinance]

Great video to the start the year, Toby. Happy new year 😊

[@TobyNewbatt]

Thanks! You too buddy!

[@SombhooG-xd4bq]

happy new year Toby! another great video

[@TobyNewbatt]

Same to you!

[@FinancialFinesse00]

Thanks Tony for this valuble and informative episode you have a very interesting perspective direct to the point and concise keep the gems coming

[@TobyNewbatt]

My pleasure!

[@TheCompoundingInvestor]

Very informative. Great work Toby and Happy New Year!

[@TobyNewbatt]

Same to you buddy! Looking forward to seeing you grow

[@andyburton8346]

Happy New Year to you and your family Toby 👍

[@TobyNewbatt]

Happy new year!

[@boyasaka]

Imo You should always pay off mortgage as quick as possible ,even if savings rates are good My reason is ,you never know what future holds, and not having a mortgage is a HUGE weight of your shoulders ,if your not paying rent or a mortgage ,you can manage of very little income , we never know if our health will stop us working or if we may loose our job etc ,hence I've always believed being rent / mortgage free is great piece of mind , We are mortgage free And our essential bills like food , council tax ,gas and. Electric ,water etc etc are less than 900 a month So if one of us lost our jobs etc ,we would always have a roof over our heads and be able to pay essential bills and buy food ,

[@cainsd1]

Absolutely agree with you, we are the same £1000 per month covers all our outgoings and if life sends one of those curve balls (which it does in one way or another) we can cope easily.🙂

[@gkhan3911]

Agree in that whilst it doesn’t make financial sense to pay mortgage off early especially if you’re fortunate enough to have a low rate, the feeling of knowing you’re bringing that mortgage term down and potentially bringing yourself into a lower LTV when it comes to remortgage is a big emotional relief factor. Not always black and white like a lot of people make out. We’re human after all. Good info and perspective as always!

[@TobyNewbatt]

Yes this is a huge win, and you’re right the psychological element is so important! Happy new year 😎

[@gkhan3911]

@@TobyNewbatt Happy new year to you too!

[@billymasters745]

2.5 percent interest rate on my mortgage here in the US and it wont go up until the loan is paid off (18 years from now because we took a 30 year mortgage). I have been considering paying off the mortgage early because of the peace of mind that would give me, but decided to invest it instead. Just last year, I made 9.6 percent interest on the money I would have spent to pay down my mortgage and there is no doubt that I made the right decision. Thank you for taking the time to make this video and including multiple scenarios to appeal to a broader audience!

[@user-ow2qv1co5s]

Excellent video. As usually.

[@TobyNewbatt]

😁👍👍👍

[@magoo9066]

For those still on low % rate mortgage deals and who want to pay the mortgage off early they also have the ability to save now with the higher savings rates and then use the extra gains to pay off a lump sum when their fixed term ends on their mortgage giving them the best of both worlds and bringing them even closer to that goal. Seems far better than paying overpayments and gives people the ability to access it in the interim should an emergency arise - could even use the extra gain to pay for a holiday and still make the same total overpayment at the end of the fixed term.

[@brianturvey1726]

Happy 2024 Toby good subject to start year and thank you for shining light on savings and interesting mortgage pay off v investing question. With Bitcoin halving next year and possible SEC authorisation of Bitcoin and Ethereum ETF in the next 2 weeks, I am taking chance on high risk Alt coins crypto to pay off 2 mortgages (fingers crossed !)😊

[@jonathanreevescad]

Happy new year everyone. Congratulations on the channel Toby and A great start to 2024 with this video, as this is exactly what I am looking at 🎉

[@TobyNewbatt]

Great timing! Happy new year to you too

[@meinages]

I'm going to start to overpaying the mortgage and continuing investing I think, only a £150 in each, each month. Just to try and get my money working at both ends of my finances. Thanks for a great video.

[@TobyNewbatt]

Sounds great!

[@manapause]

If you pay the extra money you have towards your mortgage it does leave you with less flexibility if you need that money for some life event. Even beyond making sure you have an easy accessible savings pot for emergencies. Would be the dream to be mortgage free though!

[@jamesc983]

Great video. I've been thinking about paying into a stocks and shares isa rather than overpaying the mortgage (I had to remortgage in July 23 so now on about 5%) to essentially save to pay off my mortgage early in say 10 years rather than the 17 i have left. Good/bad idea? 🤔

[@JohnBowman-ut4dz]

Hi great video you explained this very well as you said it all comes down to the person being happy with the level off det they are leverage.but it can go very badly if they get to greedy it can be a bit like gambling you can get carried away and you only see what you want to see.thanks John.

[@TobyNewbatt]

100%, it's all subjective really and comes down to you. Got to control yourself as well and not get greedy! Always easier said than done. Happy New Year John :)

[@listerswhyqueue5302]

As a sole trader, income can fluctuate from one month to the next, so paying off the mortgage in full this year is our main priority and will give us the extra cash to invest for our retirement.

[@HH-sh1rb]

Really interesting video! Wondering if you have any content on help to buy loans and repaying mortgages? I’m unsure if I should invest and use that to pay off the help to buy loan in 4 years time or pay off my mortgage and remortgage the help to buy loan! Cheers

[@nickharman4584]

This is something I've been wrestling with for a few months. I secured a 5 year fix at 2.34% in Nov 2021. I'm allowed to overpay 10% per year, so I've been trying to decide between paying off an additional 10% every month, or putting that 10% into something like the Vantage S&P 500 in my Stocks and Shares ISA and then paying a lump sum off when I come to renew. I still have 19 years left on my mortgage so paying it off sooner is not much of a concern just now.

[@TobyNewbatt]

I'm very similar Nick with a 5 year fix I locked in from 2021. Not repaying anything additional right now but could see myself add a small bit to cut down those years!

[@MrKlawUK]

3 years left feels too short to risk a stocks investment needing a return. How about a fixed rate cash ISA? if you can outperform the mortgage rate you’d be better off putting any overspend in that ISA and then when your fix ends, pay off a lump with that ISA money.

[@Armadyllo]

Happy new year everyone. We're trying to do all 3 in the same time 😊. Our 5-year fixed rate at 1.95% will end in December 24 and we've overpaid everything we had left at the end of each month for the last 3 years in order to have the least amount possible at remortgage. This will release some financial and physiological pressure from the next fixed rate term when the interest rate will most likely be at least double. Hope the BoE interest rate will go down a little bit by the end of the year. Nice video Toby! 👍

[@TobyNewbatt]

Awesome nice to hear and happy new year too 👍👍👍

[@thunder5496]

What impact will the likely new fixed rate have on you? Its something I don't often see factored into the debate. If your mortgage payment goes from £500 a month to £1000 a month that will or could eat into what was the comparable "invested" monthly amount.

[@Armadyllo]

​@@thunder5496 The fixed rates terms in the UK are relatively short compared to e.g. The Netherlands or US where you can block the interest rate for 15-25 years, which means by not overpaying the mortgage but investing the same amount might bring more future risk (e.g. not a good time to sell from investments when your fixed rate ends). But speaking about the impact, let's assume my next contract is 5% for 5 years. The monthly rate is going up 36% anyway if I keep the term, but the interest paid during this 5-year period is going to be ~£70.330. Because of the over-payments (~£115.000), I'll only pay £49.090 in interest which is a £21.240 difference. I've also reduced the term from 25 to 14 years. I guess I'll feel less pressure below 100K 😊

[@juliettan3767]

You would be better off putting everything you could into saving accounts (on interest higher than 1.95%) and let it grow until your fixed term finishes and paying this as lump sum one day after your fixed term finishes and transferring to new fixed term the following day.

[@Armadyllo]

@@juliettan3767 this is also true but... good savings accounts require 'fixed term' which is usually 1 or 2 years and I no longer have this time available. When I start overpaying my mortgage the savings rates were paying less than 1% that's why I took this path and even if mathematically it's not the most efficient one (but only in the past year or so), surely for me it's really satisfying 🙂 Besides this, as we're not talking about big lump sums to lock in but rather what is left at the end of every month. Meaning I have to open a savings account every month and even combine with one that ends from a previous year. This whole... 'thing' is not easy to manage and it's time consuming. Moreover, when you have less than 1 year left you'll have to start moving the money into a 'flexible access' account which of course pays way less e.g. 1.75%.

[@daveg3831]

Ultimately the best option, if affordable is to do both .

[@Personalfinanceandinvesting247]

Tricky one!

[@Gonk_83]

Happy new year everyone great video. I am fixed to mid 2026 1.29% I plan to stick £1000 a month in a ETF, going to pay £6000 overpayment once a year that will leave me £100k left on the mortgage when it’s due 2026 that’s my plan for next couple of years if interest rates drop then might change things up in the ETF department, won’t over pay as much on the mortgage, play it by ear.

[@AshJun17]

Was coming off my fixed in August and decided to pay off the mortgage. With the lump sum I had, I couldn't invest or save it tax efficiently so I paid off the mortgage knowing I was effectively saving almost 5% on a large amount of money. Best decision for me and very happy with it. We now have the ability to aggressively invest and maximise my partner and i' s isa. I only just started investing in 2023 too which happened to be good timing as my vanguard is up over 20% and we managed to lock in a cash isa at 5.83%. 2024 is likely to be a year of stocks and shares isas given the fall in interest rates but the decision is whether we stick with vuag or diversify in some of the "better value" indexes. Great vid as always.

[@loveday6303]

Hello Toby, great video as always! This is a massive debated topic atm for me personally. I love investing so putting all my focus in that! What is that screen in the background? Looks really cool, does it show the live performance of the markets??

[@TobyNewbatt]

Hey! It’s a WiFi screen called a Divoom Pixoo 64 and yes I have it set to some live tickers and indexes for the market 👍

[@loveday6303]

That sounds so cool, thanks 👍

[@andrewpepper3145]

It's only one of many considerations I know but probably worth mentioning, one of the biggest advantages saving gives you over any other option is flexibility. If you invest and it goes badly or you overpay your mortgage month by month that money isn't coming back. Whereas saving, while probably a lower return means you can do whatever you want. Split between all of the options mentioned in this video, make overpayment on the mortgage after renewal, make a lump sum AT renewal, continue saving, invest after renewing onto a much better mortgage deal etc

[@dannywright5058]

Enjoy the content. My mortage rate runs out in october so ive been putting everything in a 5.9% savings acount ontill then and will pay it all off when the fix runs out.

[@TobyNewbatt]

Nice idea Danny! Happy new year !

[@theYoutubeHandle]

depend on the valuation. If the stock market is in a bubble, then I would suggest to pay off the mortgage first. How do you know if stock market is in a bubble? I would sugggest put some towards mortgage and some towards investment depend on how likely you think there is a bubble.

[@thunder5496]

Forgot to comment earlier but just the sort of video I needed about a year ago. Can't remember if I seen last years or not before making my decision but when with maxing out overpaying my mortgage to the full 10%... yes investing likely to give a better return (if you get one of the good years) but that 10% overpayment is a guaranteed return, which savings are too I guess but with the added weight removed from ones shoulders by clearing the mortgage and potentially freeing up more more to invest. Currently going into the 3rd year of a 5 year mortgage fixed at 1.39% and hope to complete the mortgage 6 months after the deal expires or immediately if it makes sense.

[@TobyNewbatt]

Nice one good luck!

[@Asif24960]

I just paid in my 10% annual allowance into my mortgage. Only £14k left! So October 2024 will be my final payment. Unfortunately I can’t invest much due to large expenses this year but at a minimum want to put in £10k into ISA

[@TobyNewbatt]

That’s amazing! 2024 and you’ll be mortgage free by the end congrats 🥂

[@sandramcmahon1543]

Happy New Year Toby 😊 I do both. I’m 52 and want the last 100k paid off asap. My 2.24% ends in April…

[@TobyNewbatt]

Will feel great once that’s done! Happy new year

[@harshupadhyaya7263]

Hey Toby, what website did you use for the mortgage calc? Thank you!

[@TobyNewbatt]

It was on NatWest website mortgage overpayments calculator 👍

[@jamiebetts4158]

I just began over paying my mortgage but I think I’ll do a mixture now, £500 on an overpayment and £500 in SMP or a mixture of index funds

[@third7715]

Hi Toby, any advice for a first time buyer on an optimum level of deposit as a percentage, ie would you rather put down a lower deposit in order to keep money in the stock market or would you put as much down as a deposit? Cheers.

[@TobyNewbatt]

Really it all comes down to you this one. How it will make you feel having a smaller mortgage payment guaranteed...or roll the dice with investing which is unknown with higher potential. truly nobody knows!

[@drew_peabawlz]

starting from complete zero almost 40 no clue what to start with, i feel getting and aiming to pay off mortgage is probably the way to go.

[@TobyNewbatt]

Good luck! I think that’s a safe play and then maybe dabble in some investing later or start very small? Whatever you do getting in the habit of doing it has really helped me 👍

[@conorturton]

Debt getting smaller because of inflation working relies entirely on you getting a payrise. It's not inflation reducing the debt, it's wage rises reducing the debt as a percentage of your income. No pay rise from one year to the next and your debt is still the same percentage of your wages as it was the year before.

[@TobyNewbatt]

Sure inflation has to also work on your income as well. You're right If you are not getting inflation adjusted pay rises over the years you're being scammed and need to find a new employer. Obviously it's not magic :)

[@matthewdodd7657]

Saving money in a saving account is good at the moment when interest high. I will start investing when interest drops to about 3%.

[@TobyNewbatt]

Interesting! Are you slightly worried about inflation eating those 3% gains up for breakfast? Hope you have a rgeat NY :)

[@lesleywillis6177]

If you would rather invest than pay off your mortgage, is that the same as saying I’m going to borrow against my home to invest the money? A different perspective?

[@BaileyMxX]

Agree with you that this decision is highly subjective and there's no real right or wrong answer and differs for everyone. Mathematicaly investing it is the answer but with higher rates closing that gap (risk/reward wise)then it comes down to personal circumstances and if you have a need for security. I've never met anyone who's lost sleep over night at owning their own home outright and the security of it being theirs not the banks. On the other hand, seen people overleverage at cheap rates to then be crippled on that leverage when rates have gone up, same can happen if you're relying on the investments to pay off said mortgage if need be and the market falls. There's definitely a huge security in being debt free, but it's certainly not the quickest way to wealth building.

[@TobyNewbatt]

Indeed great comment thank you. Have a great 2024 :)

[@ploppy193]

Happy Healthy New Year everyone.

[@TobyNewbatt]

You too :)

[@mattquantrill101]

Hi Toby! Great video as ever, just a question. It used to be the case that you could only pay into one ISA in a tax year. So I used my S&P500 as my only ISA and playba round a little with Dividend investing (but dont make enough to come near any tax brackets) has that changed at all? Thanks. In advance for your help,

[@TobyNewbatt]

Not sure what you mean by the question Matt? The rules are one stocks and shares isa account per tax year. What you do inside of the account is up to you and you can buy and sell whatever you like 👍

[@mattquantrill101]

@@TobyNewbatt thanks Toby! Yeah as I was writing it I knew it didnt make sense 😂

[@RustyVanDoor]

Paid the mortgages off as it grew to over 1k a month, the interest on the cash wouldn’t cover it and still would have tax to pay on it.

[@disct1597]

I’m doing both since 2005, investing and paying off mortgage, £30k to go.

[@kinggeoffrey3801]

I'm on 37k. A race to the finish. 😉

[@TobyNewbatt]

And they're off.... I want to know who wins :P

[@gadagaz]

Happy new year all and great video again Toby. I just buy VUSA every month and hope that in 30 years it will supplement my DB pension. Lucky enough to have a low mortgage rate as it is as I am in the NE, so investing is just the way for me. Shame I only took it seriously in 2021 though!

[@TobyNewbatt]

Happy new year buddy!

[@boyasaka]

NE as in north east UK ?

[@gadagaz]

@boyasaka Yes, if you put into Google - "where are the cheapest houses in the UK?" - the top 7 results are all north east. Its not as bad as everyone makes out either you know! 🤣

[@boyasaka]

@@gadagaz I can't understand why more people don't move " up north " I was born and bred in Sunderland ,lived in a few places there ,I've worked in Brighton worked in ,Portsmouth and Plymouth for years ,visted friends who live in London ,Liverpool , Essex, am well travelled but the north east has always been my home ,I moved from Sunderland to south Shields 2 years ago ( officially south Shields but just over the sbeilds / Sunderland border mind ya so not officially a sand dancer lol ) and the north east is no worse than any other part in the UK Just like everywhere else ,it has it's good areas and shit holes ,same as London and other so called posh places , plenty of lovely places to live in the north east at a fraction of the cost of " down south "

[@girendrasadera4547]

Not paying off your mortgage during high interest rates and high inflation - that’s insightful. Could you explain a bit more?

[@girendrasadera4547]

Does this also make more sense if you have an offset mortgage that is linked to the base rate ?

[@cyleun]

Any take on buying gilts with low coupon rate to save some tax on interest? Capital gain tax is exempted on Gilts.

[@TobyNewbatt]

Yes good suggestion - another think I forgot to mention is don't forget that premium bonds are all tax free as well. As usual it's up to you if you have a lot of cash and already have used your tax free accounts.

[@cyleun]

@@TobyNewbatt Some gilts are much more tax efficient than saving account (if you fill up your ISA already). Premium bonds has a limit of £50k but gilts is basically limitless. And by definition it should be safer than saving account offered by banks. Don't understand why it is so underrated and no one is talking about it.

[@itouch00]

Can i ask, if I'm a higher rate tax payer and I take out a savings account and then lock in for say x3 years. Say in that time I'd earn £1k in interest does that mean I'd have to pay interest on that £1k when it matures in that 3rd year (because its over £500) or will i be exempt because my allowance over 3 years would have been £1.5k. Not sure if that makes sense? ps thanks again for a great video, I've been toying with this plan for some time!

[@TobyNewbatt]

Great question, in principle as the allowances are annual you would not have to pay tax as it is PER YEAR. Now, as I understand it, even in a fixed-term savings account of 3 years the interest is still paid PER YEAR but you'd have to check this with the account. Alternatively, if you can don't forget about your Cash ISA as this is all tax free in case you aren't using your full £20k allowance per year.

[@minimad8793]

well, I am still on a rate of 1.63% which is fixed for at least another 3 years so saving and overpaying the mortgage, albeit proportionately more is going towards saving and investing. I do have a set number that I wish the mortgage to be when the fixed rate finishes so that's the reason for overpaying.

[@TobyNewbatt]

Nice good luck, i'm at a similar rate and managed to fix for 5 years back in 2021, so couple of years left for me.

[@minimad8793]

@@TobyNewbattGood to compare in a few then eh :)

[@barnoluk9272]

I’m going ham on my mortgage this year. Got £180k coming out this year and it’s all going off my mortgage.

[@TobyNewbatt]

Boom, keep us posted on how it goes in future videos :)

[@barnoluk9272]

@@TobyNewbatt will do!

[@clarenceishmael9615]

Best thing I ever did was get rid of my mortgage because it's freed up so much more money for investing and this recent period of high interest rates have left me with a nice return on my cash savings also. Win Win I think! 😊😊

[@TobyNewbatt]

That’s brilliant!!

[@clarenceishmael9615]

@@TobyNewbatt cheers. Keep up the good work in 2024!

[@OliverDesvauxdeMarigny-kq3cb]

So I’ve got a £350k mortgage with monthly payments of £2k. Finding that the balance of the mortgage isn’t moving much as the 5% interest rate we’ve recently had to move to, means the overall balance of the mortgage isn’t budging, and the £350k remains the same. Have about £30k in ISA and obviously putting money aside each month for investing - about £800. Question: should I just do a big repayment from that £30k and have slightly lower monthly figures and less interest applied on the mortgage balance,, or save bigger and THEN do repayments? Tough situation

[@rkent06]

When you say your mortgage balance isn’t budging, how can that be possible if it’s a repayment on a term, for example 25 years? Unless you’ve taken it out over a crazy number of years surely the balance is coming down by circa 1k a month?

[@peelyo94]

do you think it will always be around 9 percent though for stocks?

[@TobyNewbatt]

Only as a long term average, yes. It wont matter a huge amount what the next 10 years do as that average will remain. BUT we have no idea, so that's why I'll continue to invest each month no matter what over the very long term :). There's no other alternative if you want to preserve and grow your wealth in my view.

[@peelyo94]

@@TobyNewbatt I managed to pay my mortgage off so I'm investing in global vanguard 100 hopefully till I retire early hopefully or take some out to buy a second home for Income, so I really hope the returns are high the next 10-20 years 🤞 do you invest in just one fund or multiple?

[@TobyNewbatt]

Sounds great! You can see my portfolios here on KZbin. Outside of them I also have some stocks too in another ISA, but the majority will always be in low cost index funds :)@@peelyo94

[@user-du3br9bj5x]

How do you actually pay tax on savings interest? Is it automatically taken through a change in tax code or do you need to pay it yourself?

[@TobyNewbatt]

Nope you’d have to declare it through a self assessment as it totally depends on your own situation. A bank or any other platform would not be taking the tax for you 👍

[@user-du3br9bj5x]

@@TobyNewbatt Interesting. I was under the impression as since it’s classed as income it was taken the same way as PAYE from employer would be. Never had to worry about this before but with rates as high as they are it’s something new to learn for me. Thanks mate!

[@re7350]

@@TobyNewbatt Hi. I'm confused as this is what it says on government website.............You pay tax on any interest over your allowance at your usual rate of Income Tax. If you’re employed or get a pension, HMRC will change your tax code so you pay the tax automatically. To decide your tax code, HMRC will estimate how much interest you’ll get in the current year by looking at how much you got the previous year. If you complete a Self Assessment tax return, report any interest earned on savings there. You need to register for Self Assessment if your income from savings and investments is over £10,000. Check if you need to send a tax return if you’re not sure.

[@brickchamp4199]

No mortgage, no savings, no debt, pay my bills, have a few treat nights in and out, one emergency fund and various investments i.e. ETFs, Index trackers, Investment trusts, and a balance of high, medium and low risk stocks spread across various sectors i.e. Consumables, Consumer Health, Disruptive, Energy, Finance, Healthcare, REITs, Tech and Travel..

[@TobyNewbatt]

Nice and simple, I bet you sleep very well :)

[@HomebyRC]

Is it worth trying to overpay your mortgage a bit each month when you might move to bigger house in the future or not really?

[@TobyNewbatt]

It really is up to you...purely numbers based investing makes more sense but it's never guaranteed. Paying off your mortgage is a guaranteed saving and it might be more motivating. All depends on timescales and the level of risk you want to take

[@HomebyRC]

I invest £150 a month and over pay but I suppose there might not be much point paying it all off early when I will then need to borrow more in the future to move to a bigger house :s @@TobyNewbatt

[@kelvinevans1683]

Thanks for the video Toby, covers all the things I've been thinking about. My fixed term mortgage comes to an end in 2 years, and I'll be able to cover most of it by selling investments I already own. I've been trying to make a plan for how to derisk and divest those shares whilst not losing it in the available time. Any thoughts?

[@bionic909]

Is the VWRP a good world index fund?

[@TobyNewbatt]

Yes it’s one of my favourites for a global one

[@slayerrocks2]

I paid off my mortgage and the feeling was liberating. However, I was not aware how easy it would be for me to find work, with such in-demand skills. So, I would have done things differently, in hindsight. How about investing, and then, once you had accumulated 6-9 months worth of outgoings in case of losing a job, then overpay the mortgage? I wouldn't overpay unless I had that safety net. Once that is there, a combination of savings and overpayment. If investments perform really well, cash them in and overpay some more. If they do badly, use the savings account to overpay some more. Have peace of mind AND maximise your earning power. Just a thought.

[@TobyNewbatt]

Great comment thanks for that perspective.

[@ant270]

You can usually (AFAIK) only pay off 10% of the mortgage balance penalty free each year. So, could pay that off and invest until you can pay a lump sum off when remortgaging. My accounts currently pay more than my mortgage rate so, not much point paying it off. I also put a lump sum into my pension that would pay off the remaining mortgage If I chose to when I come to retire.

[@TobyNewbatt]

yes 100% you're right you are limited to 10% a year so this video is more about overpaying gradually than all of a sudden. :)

[@lewisscott22]

I’m a lucky one that will manage all three! Savings - Emergency fund instant access Investing - Maxed out ISA in VUSA Mortgage- overpay 10% every year. I managed to keep a 3.5% fix for another 5 years last November. I managed this last year and will do so again this year- this was the best for 0 fees. My net worth doubled last year too! But I do rent a room for a lodger (tax free up to £7500) and rent out my car parking space. It’s all doable!

[@TobyNewbatt]

Lewis you are smashing it! 😀🥂

[@jazzsingh9738]

I unfortunately locked into a 5.59% mortgage that allows 10% overpayment a year. I will be making the 10% and then extra into my stocks and shares ISA

[@TobyNewbatt]

Good luck! hopefully you can get a better rate soon.

[@jazzsingh9738]

@TobyNewbatt no panic as fortunately I have a smallish mortgage and the payments are very manageable.

[@ChrisShawUK]

I think you have to do both. Most wealthy people in their 50s have no mortgage and a chunky portfolio. The disadvantage with just focusing on paying down the mortgage is that you are losing on both compounding time and investing experience. The problem is that you get to your late forties with a house you own but no knowledge or experience of portfolio creation. It's very difficult to learn the discipline needed at that point

[@TobyNewbatt]

That's a great point Chris, the experience of investing in the long term is definitely important especially through the crap times! Hope you have a great NY and thanks for all the support

[@ChrisShawUK]

@@TobyNewbatt hny to you also ... I'll be tuning in throughout 2024. Your videos are like a financial gym... There are so many points you have to consider when wealth building, it helps to do small amounts regularly.

[@joeydix]

Where can I find that overpayment calculator please?

[@TobyNewbatt]

NatWest website search mortgage overpayment calculator

[@DVDKEV]

Don’t overlook the tax advantages of investing disposable income in pension over mortgage overpayments. Pension contributions are effectively made from gross earnings, avoiding tax. Savings and other investments are from net income. A £400k pension fund could be used to take a £100k tax free lump sum to pay off a £100k mortgage when you retire. For example, as a higher rate tax payer, the net cost of building a £400k pension fund with an employer contribution, 40% tax relief, 2% NI saving and a potential 13.7% Employer NI incentive is minimal compared to the other options. You may find your disposable income increases later on in your mortgage term and you don’t need to use the TFC from your pension fund but the option is there if needed.

[@BillY-tw8xc]

If you live abroad and save over £1000 pound a year, is it taxed? Even if you earn below the £12,500 a year tax bracket? Thanks!

[@TobyNewbatt]

Sounds complicated, wont this depend if you are still classed as a UK resident for tax? If you aren't none of the tax rules apply. Depends how many days of the year you are living abroad. Maybe someone else can help.

[@BillY-tw8xc]

@@TobyNewbatt It is a complicated situation as everyone I asked has no idea, lol. I'm not a UK resident, but I think I have to pay the same as a UK resident, but not sure if I'm under the 12,500 tax bracket. I hope someone can respond. Anyway, great videos, and thanks for your response!!!

[@skinbeautyproducts1998]

Compound Investing is worth it, not this traditional way

[@jameshunt8783]

Excellent video to start the year! Being on a 2% mortgage until 2027 I feel that investing and also putting a bit into my 6% savings account is the way to go for me. Hopefully start hammering at the house capital in a few years to knock the time down a bit. Happy new year 🥳

[@bradleytwebster9314]

Yeah we’re the same so can’t see why we should lock the money away by overpaying our mortgage when we can save it with decent interest and then just make a huge down payment when we need to remortgage if needed

[@robertsoso7093]

Happy new year Toby Yes the mortgage payments look like shrinking over the years when you compare it to other expenses

[@TobyNewbatt]

Happy new year!

[@accesszero4803]

Ive got a few low amount to let morgages and am paying one off every year or 2

[@TobyNewbatt]

Nice good luck!!

[@TruthTeller00]

Let’s just say for talking sake, you stuck £80k into that NatWest Ulster Bank account for 12 months and you were considered a low earner. That’d be £4160 at 5.2%. Would you receive all of that interest, or would any of it be taxed?

[@TobyNewbatt]

It depends on the account - but I just checked and it looks like Ulster pay annually. Others may pay monthly, that's all up to them :) You would receive all the money, anything to do with your own personal taxes would be for you to declare. The bank has no idea what your personal tax situation is.

[@jackshar3152]

So interesting to see so many people's views about paying off their mortgage. Excellent points made 👍. It pains me not to be overpaying mine atm but interest rates are just too good. My money is safe and I then invest what I can afford to lose. Fab video 👌.

[@TobyNewbatt]

Yes as always a great community of views. Happy New year!

[@stefanzurbruegg2047]

4.5% on a mortgage. This is too low in the UK right now unless locking in for long term maybe. I double checked. Good vid as usual

[@TobyNewbatt]

Yes I was thinking slightly ahead as rates fall (we hope) 😂

[@Jeffybonbon]

paying off a mortgage is emotional no wrong or right

[@Casualclips17]

What about paying of my student loan at 6% 5k remaining

[@TobyNewbatt]

Personally I'd see that as a low interest loan that would not be me priority but again it's all personal choice really :)

[@Casualclips17]

@@TobyNewbatt thanks toby

[@Jeffybonbon]

I own around 60k on fixed rate til oct 2025 1.6% I have 150k in my pension and i am drawing only tax free cash per month to pay my mortgage so one investment is paying for my house so it dosent feel like i have a mortgage

[@TobyNewbatt]

Ahh thats a nice way to look at it Jeff!

[@maestro19965uy]

Where do I get 9% return on my investment? Can I also lose?

[@TobyNewbatt]

Of course, an investment is putting your money at risk. There is no reward without a level of risk. 9% is the historical average across 2 centuries of the markets, but it is never guaranteed.

[@maestro19965uy]

Are you referring to S&P500 Toby?@@TobyNewbatt

[@davelangrell9278]

Quick question me and my partner share a santander account with £50k at 5.08% will the tax free interest be doubled as its in a joint account?

[@TobyNewbatt]

Tax free amount is doubled as a couple as the rules are per person not per account 👍

[@EggsForDessert]

4:40 am I the only person blowing my screen to remove the dust? 😅

[@TobyNewbatt]

😂

[@barbarar5869]

I believe in diversification, especially as a single person as I can only rely on my income should anything happen. Yes, having no mortgage or lowering payments is very comforting, but so are investments, which I can sell if I need quick cash, even if it means selling at a loss

[@lrac111]

You can earn £5000 worth of interest if you earn under the tax free allowance

[@TobyNewbatt]

For sure yes, if you have no/ very low income but lots of money in savings you can earn more interest free. Not sure many people will be in that boat as even a pensioner with the state pension is going to earn close to the earnings allowance :)

[@lrac111]

Hi Toby, I didn't mention being a pensioner but even so a pensioner can do also, you don't suddenly start paying tax at £1 pass £12570 it's on a sliding scale. Also like myself I know loads of people who retired at 55yrs with an income close to the tax allowance who have lots of free cash in isa, bonds, premium bonds and many other ways to earn money without paying tax. Your statement was wrong pal because there're another large section of people who are in this position.

[@midlifecarsis6420]

This inflation eroding debt thing is such bullshit. In theory yes it works but in the real world it only works to erode debt on the asset if the value of the asset and/or income also rise at or above inflation. Everything inflates at a different rate. Granted, this has been true of UK property but not most other debt as the majority of people have had real terms pay cuts for the last decade or so.

[@dm_psych_]

Just renewed our mortgage to just over 5% fixed rate for 5 years, so for now I'm going to keep investing any extra money I can for the next few years and see what the situation is when I'm up for renewal. I think the decision for me is a simple one, wherever has the higher rate at the time is where my money will go, if there's lots of big changes over the next few years and we can not get mortgage rates lower than the average stock market growth then I will switch to paying that down faster

[@shimsteriom4191]

Great video Toby, thanks. I'm working on being mortgage free in the next 4 years by overpaying rather than investing. Sometimes this decision hurts when you see how well the market is doing, but as you said in your video, being mortgage free can be priceless. 👌

[@shelleyk7462]

This is exactly my plan too, with the same timeline. My mortgage is 1% above the Bank of England base rate which was good when rates were low but not anymore. I’m paying my normal monthly payment + overpaying a minimum £500 per month. My mortgage provider has confirmed there are no charges for making overpayments. I should have this paid off at the end of 2027. I can’t wait!

[@shimsteriom4191]

@@shelleyk7462 I'm on a base rate tracker mortgage so my interest rate is 6.24% at the moment but I'm hoping that this will drop during 2024. I'm sure 2027 can't arrive soon enough for you 😉 I'm also paying about £500 extra per month. I also invest a couple of hundred pounds each month in to a Global Tracker which will hopefully increase over the coming years so there will be a point at which I can just cash out from my investments and pay off any outstanding mortgage amount 🤞

[@hooksforestchin]

Over the 20 odd years of having a mortgage we flip-flopped from paying it down, to using the money for investing in other things and probably always at the wrong time, but helped by an offset mortgage. My key takeaways from that are: 1) Savings must be the first point, not just the emergency fund, but a bit more as well. Houses can be surprisingly expensive at times. 2) I'd then suggest investing into an ISA for a couple of reasons. Firstly, it gives you the protection and security of having the money available which you wouldn't have if you'd overpaid the mortgage - if you lose your job, you can use it to keep up the standard payments etc. You then get the potential better long term returns of shares and can use the lump sum to pay off the mortgage early in the future if you want to, remembering that 20 years of inflation is going to make the payments and whatever is owed feel a lot smaller than when you initially took it out.

[@porschecarreras992cabriole8]

Pay both mortgage and invest. Split the £200 spare you have and put half in investing and half in mortgage so you have the best of both worlds. Just to add that there is also pension investing which is different than investing in my view and should be seen as a forth option.

[@simoncook1325]

I sold my buy to let and invested the profit.Lovely not having a mortgage anymore.Got house in Thailand with no mortgage so going there to live

[@TobyNewbatt]

Nice one Simon :)

[@simoncook1325]

@@TobyNewbatt Thanks you Toby

[@drln1ghthaunter]

Our mortgage is fixed at 1.7% untill mid 2027. Regardless of if I want to pay it off quicker or make more in savings I'm better of putting it into something like a 7% regular saver for now. I can decide whether or not to do a large overpayment when its up for renewal and with the extra interest accrued, it brings it closer to being fully paid off too.

[@Gemok1980]

For those under 40 a further thought would be investing via a S&S LISA and having your Mortgage run until you're 60 or even 70.

[@benjaminheginbotham7927]

If you had a mortgage at 2% with a fixed rate that was ending in 2 years you should look at fixed rate savings account for the same period at 5%. Then when both rates end you would have the option of either paying down your mortgage or using the money for something else. Investing over this period isn’t a sure things so if interest rates and a mortgage are worrying you this would be a good option.

[@smeg3519]

I paid my mortgage off in my late 30’s thinking it was the best thing to do. I don’t regret it at all. Now my plan is to work hard and invest heavily for the next 20 years and see where we are. Hopefully not in a box 😂

[@TobyNewbatt]

Congrats! And lets hope we have a great 20 years ahead :)

[@francesboyce3221]

passive income nonsense I love dividend investing

[@TobyNewbatt]

Keep it up, invest in what you like :)

[@gman6055]

Great channel and really nicely edited videos Toby. But if you neglect to mention the performance of BTC or eth you're completely negligent. Cryptocurrency has its scams - yes (so do big companies / Enron e.g.) but Bitcoin is the best performing asset in the world and you don't touch it. Makes you look like a clown tbh

[@IAmebAdger]

There isn't the 100 years of data we have in the stock market for crypto, so there's nothing Toby can say about it that would be backed by a good amount of data.

[@gman6055]

@@IAmebAdger what an I'll informed comment. I'll say no more than this, you think tech stocks had 100 years behind them? You think BTC needs a hundred years to be legit. Have you heard of BlackRock.

[@ChrisShawUK]

There's tons of places you can go on KZbin for advice about bitcoin. Toby is crystal clear in all his videos that he invests only in stocks. That means for gold, wine, art, crypto, nft, whisky and other commodity investments, you're going to have to source another clown to help you. I don't think Toby should start expressing an opinion on something he knows nothing about

[@gman6055]

@@ChrisShawUK fair enough. But any financial channel that ignores the globe's best asset isn't really worth its salt. I'd add that post BTC spot ETF you'll see a huge inflow of wealth and Toby, plus others like him, with look obsolete and negligent. The fact that this best performing asset isn't mentioned on these channels means they are deeply out of date. I hope ppl look wider than the advice pushed out here

[@ChrisShawUK]

@@gman6055 but the goal of Toby's channel isn't to survey the best returning asset classes. That's not what his subscribers want at all. The goal of his channel is to set out strategies to consider when investing in the stock market, both in the UK and worldwide. If you don't want to invest in the stock market, there's very little point in watching his channel. I also watch a load of KZbin channels about astro and CSS. I don't particularly want my CSS guy covering astro or any other hot framework out there. I have enough background knowledge to go and seek the right KZbin guy for those topics. It's exactly the same for finance. Horses for courses.