We’re about to inherit $200k and are not 100% sure what the best thing to do with it is - some info on our situation:
$1m mortgage, home value $1.3-1.5m
approx $250-$280k joint income (I’m on mat leave and will be working PT 0.6fte for the next 2 ish years)
income growth potential would be to $300-$330kpa by 2025
mortgage split is 80% (fixed at 5.74%) and 20% (variable currently at 5.99%)
Current plan is to pay off the 20% variable part.
we have a few things we’d like to do to the house (garage conversion and bathroom refresh) but could save for these instead or pulling it out of this inheritance
we may look to move in 2-5yrs as well for a bit more space but we don’t HAVE to, would just be nice
Other half has dabbled in stocks and would like to invest - we’d love to work towards retiring early
the money is coming from the UK so any advice on getting it here with as little loss as possible would be appreciated.
Happy to answer other questions and would love people’s thoughts on if we could make more use of the $ we’re about to get!?
@morgan772 Maximise returns.. you mean if the OP wants to sell their home.. if they don’t then it’s a sure way to never get the mortgage reduced quicker then planned
@youfixallimnot The returns when you one day downsize? If property increases 10%, and you have a larger property then you stand to realize greater increase in net wealth, with the gains on your PPoR being CGT free. Hence so many wealthy people have a decent chunk of their wealth in their PPoR - it’s a tax arbitrage. If you can afford it, there is no harm in upgrading your PPoR in keeping with your income and family’s needs.
@krazed Why do you need to pay your house off now? You can just keep acquiring more equity by upgrading and selling then downsize and buy a house outright.
@asteinmetz84 So pay a PPOR mortgage for 40 years and hopefully sell for enough to cover the mortgage balance and buy a smaller home outright.
I lived in my first house a shitty Queenslander for 15 years paid it out then bought my brand new dream house with the equity and savings renovated the old house and sold it in the housing bull market, now I owe 500k on a 1.4 million dollar home mortgage is $3300 I pay $6500 a month and will have it paid out in 5-6 years, will stay here for another 10 years at least, and buy other investments, the big thing about laddering in a PPOR is purchasing costs and selling costs if you sell and buy every few years your blowing loads of money to stamp duty solicitors etc each time.
@rhythmofthenight Think of your mortgage as a tax free, guaranteed term deposit. Assuming a higher tax bracket your 6% mortgage is the equivalent of a 10% return (as you pay tax before paying it off, no tax deduction).
So if you can find a guaranteed way of earning 10% or willing to take that risk, yes by all means.
