Continue to save or clear mortgage

Discussion in 'Money makeover' started by Me102016, Oct 21, 2016.

  1. Me102016

    Me102016 New Member

    Posts:
    1
    Afternoon all,

    Quick one, we rent a house for 1200 a month and would like to purchase in the same area for around 400k in a year or two if possible.

    My question is - should we

    a) Clear rental mortgage with our savings then save 1700 a month
    b) Continue as we are to pay off rental mortgage at 500 a month and save 1200 a month
    c) Clear rental mortgage @ 1700 a month (putting our 1200 savings towards the mortgage)

    Age: 32
    Spouse’s/Partner's age: 32

    Annual gross income from employment or profession: 50k
    Annual gross income of spouse: 50k

    Monthly take-home pay: ~5,500

    Type of employment: Both private sector

    Saving : 1200 a month

    Rough estimate of value of rental property: 110k
    Amount outstanding on your mortgage: 40k
    What interest rate are you paying? 3.5%
    Rent takes in a net 500 a month which is put towards the mortgage repayment.

    Other borrowings – car loans/personal loans etc: None
    Monthly expenses: rent of 1200 a month

    Do you pay off your full credit card balance each month? Yes
    Savings and investments: 40k cash
    Do you have a pension scheme? Yes
    Life insurance: Yes