The Vault with Financielle - “Should we reduce our mortgage term or keep investing?” | The Vault Episode 107

Episode Date: March 16, 2026

Re-releasing this episode due to a technical issue with the previous upload. Everything else is the same!“My friend owes me money and seems to have forgotten but I’m too scared to mention it to her”… jail or no jail? 🚨👀If you’re the friend who always ends up fronting the money for group plans, this one’s for you. We mentioned ⁠⁠⁠Collctiv⁠⁠⁠ – a simple way to collect money for things like birthdays, hen dos, trips, or shared tickets without the awkward chasing. It keeps everything organised, automated, and stops the organiser being left out of pocket.This week, we’re diving into these money dilemmas:💸 “Should we reduce our mortgage term or keep investing?”💸 ”Do I share my inheritance as an unmarried cohabited couple?”Got a money win or (totally anonymous) dilemma? Share it via the Financielle app community or email ⁠[e-mail]⁠ 💌You’re not alone in figuring this stuff out. Get honest, helpful reads at ⁠financielle.com⁠ 💖💸Connect with our Partner🫶 Protect yourself and loved ones with our friends at ⁠Lifesearch⁠**The above is a tracked link, which tells our partner we sent you and may in future result in a payment or benefit to our site.

Welcome to The Vault with Finanit Child. This is a safe space where we talk all things life and money and no topics are off limits. Good morning. Glory, you look very cosy and you're blending into the couch. I'm telling Carl, I'm on a podcast. Tell you in a minute. Do you not know? I don't know what it's asked about like.

I'll text in a bit. I'm very cozy and this was a prime act special that I coughed off for Trish. My mum walked in with one and it's getting springy time now so I have to get prepared to leave the jumpers. Yeah. Not behind, but there's some that are very prominent. Like, do you have winter nits and spring nits or? Yeah, I do.

I wear a jumpers all year round. I love a jumper. Yeah. We like, when, I can't think about when we put, like, electric blankets away, but I love stealing avas and putting on my legs in the office. Yeah. I don't have a cold office, but I just like being cozy. Yeah.

It's like it is literally a comfort blanket. Yeah. Yeah. Very definition of one. You feel like there was only one month last year where I didn't use it. Yeah. When it was like... When it was warm last year?

I don't think at all. I don't think there was a month where I go. That was a lovely warm month. Not really. Not as warm as it. We've not had the heat wave. I think there was a... There was because I got a tan in the garden.

Yeah. I can't remember what month it was now. But like it's an emotional support dog. You got like an emotional... Comfort blanket. Yeah. Heated blanket. So cozy.

Okay. Time for jail or no jail. Right. I got my... S. My nails on there. I'm ready. I'd rather wipe my emergency fund

than make an insurance claim to avoid higher premiums. Say it again. I'd wipe my ass. That's what I heard. I thought you were going to say that. You'd rather wipe my ass. My intrusive thoughts

were that you were going to say that on the podcast. We've got children. But now Laura said it. So I didn't have to. We've got children. Say it again. I'd rather wipe my emergency fund. You were.

Then make an insurance claim to avoid higher premiums. A bit of jail on this, right, because it's what it's there for. And what you can't predict is insurance premiums. You can't predict how it's going to impact it. I am, though, a big fan. This is something that actually like we did do a partnership with compare the market and we were talking through like how can we help people actually. actively reduce what they spend on insurances because they are really high. And we've got loads

of super good tips. In fact, let me see if I can roll some of them off. So one of them is, like, looking at things like combined policies, one thing that you can do is a combined in your household and stuff like that. So having a little test shop around because you, loyalty does not pay. And actually, more recent years, car insurance premiums should be coming down. So if you get like a renewal and it's like the same or a little bit cheaper, don't go, yay, it's not going up. It should have been going down. So there's all these little hacks. But one of them is, especially with car insurance,

I've had its home insurance as well, is, I'm talking so fast when I get excited about how I can help people say. You can be so excited about insurance policies. One of them is also to up your voluntary excess on insurances. So there's an excess on policies. Let's say you've got like a £300 car insurance excess, which means if you something happens and it costs $300 or less, it really doesn't make sense to make a claim because you have to pay 300 anyway.

If you're zero excess, then maybe you would. But if you've got a 300 excess and like say you damaged a light on your car and the parts plus labour is 300, there's just no point doing it. You can also add on a voluntary access. So you might have a that of 300, a regular excess of 300. I think it's called a compulsory excess. And then a voluntary access of 300. And that's 600. but if you have an insurable issue, like a car insurance issue,

like we want the car to be covered. We want 20 grand or 15 grand or 10 grand to be covered. But we could probably hack a grand or 600. We could probably not hack it, but like handle that. So I, most of us hope that we don't need to claim an insurance policy. Most of us hope that when we won't cover, we want it for the bigger thing. But for the little thing, we're financially savvy. We've got an emergency fund.

So then that's okay. So I would absolutely make sure my, I do make sure my excess is high. We always say Carl and I like, what are we prepared to pay to then not impact our no claims, especially on car. Similar with home as well, for me, home insurance is like catastrophic issue. Big, big league. Yeah, I was going to say what has to happen. If it's like, I've spoiled the carpet.

We've done that already. We're like, calm. There's a big iron mark on your car. It was so upset. I'd be like, meh. I've got like curling tongue marks in the carpet upstairs. maybe if he's 40, when he's been 41,

40 to your second birthday I'll buy him some new carpets. But I'm prepared to cash flow and to fund smaller things. But then big leak. We got a big leak and we had to rip out the whole shower. It was coming into the kitchen.

It was coming into this what like everything had to be. Lights. Everything had to be ripped out. So then we're like, well obviously we're going to play. Yeah. Yeah.

Because it was so, it would have been, it was thousands. So it's like we're literally starting from scratch. Whereas if it would have been, you know, we've had a leak upstairs in the bathroom. We just called the roof man and got him to come and have a look at it. And he did a few things and he's like, he should be fine. Like we would never claim on the insurance for that, even though it did have like water damage in the bathroom.

But we can pay it over it. And he's like, it's really not a problem. I've checked it all out. Whereas the, we're ripping every single tile out wasn't a job that we could do. This is pragmatism. So don't be scared of claiming. That's what it's there for. And you can't predict how much it will impact.

What are you doing when you protect your no claims? Protect your no claims. It means. It's like fate. It's like a lie. It's suddenly like it's dawned on me that protecting you know claims maybe is to pay to then claim and I don't know. Then you don't get black mark.

I follow up with that one. I don't. I honestly don't know. I think that's what we're all human. So right. G.A. because you shouldn't avoid it. It would be silly.

That's what the insurance is for. What's the part? I know you legally have to have it. What's the point of having it there? Okay. I'll stop now. I feel embarrassed just to ask basic finance questions. No, Jill.

Yeah. Do you feel for you? We've got empathy for you. But like we always say you don't need to know everything. Just enough. Basic things like we list out in the playbook, knowing your numbers. I feel like I'm talking a lot, obviously. It's a podcast.

But I've got a policy on this. So when I think mum does this and I think I've learned this from her. but I definitely learn I'm high too which is an in joke for people that I used to work with sorry we used to do this like personality quiz

high empath high social and I like everyone to feel comfortable and I'm also like okay laughing at myself I'm only human as I just said

then I'm happy to not know everything on the BBC I'm happy to go I don't know that I really don't care and especially as a youngster I think you do have youngster because I'm a young whippersnapper you young people

you feel like you have to know everything and you don't and one of the best things you can do, that should be really humble and have humility and go, I don't know that. And there'll be someone else in the room that also doesn't, right?

So never be afraid to ask the question, but, and this is a really big but, you can't have that, like, weaponised incompetence where you also then don't want to learn and you don't want to know. And so you can't play the, there's only so many things in finance you need to know. Let's say there's 10 big principles making it up.

it's okay to not know any of the 10 but to learn like one each time so like I can tell me my credit card's bad I will tell you every week on this but if you ask me in a year's time and you've listened to this podcast and you still don't know what it is not cool you're not you are in jail then financial jail and you're spending on the credit card and you lax with everything and but I want to be better with money but you don't because you don't put any effort into knowing even the basic principles not the really high-end stuff that you have to go to uniform so like you are okay and it's okay and it's actually quite empowering and try it. This is a really cool thing at work. Try. If someone says something

in a room and they speak with jargon and they like love being really complicated, please don't be afraid. Sometimes it makes it's them that looks stupid. You don't always know. I think it's a famous, I think it's a famous Twiggy interview with Woody Allen and Woody Allen. And she's only like 17 at a time in the supermodel. He says something like, I think it's Woody Ellen. Who's your favorite philosopher? Trying to catch her out and she goes, God, don't know any philosophers. And she goes, who's yours? And he goes, oh, I like all of them. She's like, which one?

If you're not seeing the interview? No. So good. Do you know it? Lydia knows it. And she goes, all of them. She's going, go on. I don't know any.

I want to know one. Tell me. Silence is like the best. Do you know, like not filling the sense. Like you said, tell me. Awful. If you want to. I just have to fill it.

I'm pathetic. So don't be afraid to kick it back. Don't be afraid to kick it back. But ask that question, don't be afraid, don't be embarrassed. But the other end of the scale is it's not an excuse forever. Like if you've asked that question once or you don't understand it and you then have been told, don't go la la la la la. Like my kids.

Get in the financial community. That is where we can. Yes, help. No judgment. I don't know what my emergency fund is actually for. Yeah, probably in no jail. Yeah. Because I don't necessarily know what my emergency.

funds for. I can give you like a scope of things it could be for. The only time this could be jail is when it's like, oh, I've not budgeted for petrol. Paris,iles. Yeah, Paris, tiles. Can't relate. She did budget for Harris-Siles. I did. Let the listeners know, you secured four tickets for Harry Styles. Three or four? Three. Three. Three. Standing. How much? At the front. Two hundred and five, because we secured our tickets with something.

we were too scared to let them go You're paying insurance, I think so. Did you, did you, who was fastest finger first? Was it you? No, my friend. This is a really personal question.

She didn't have to answer this on her behalf, but did she have the money to pay for three? Yes. But I sent it straight away because I was like, please. Because she's just spent £600 on tickets. I reflected on that recently about

aren't you in a strong financial position? if you can. Also I'll take like, obviously, pay me if. Buy Harry Sal's tickets. And pay a few friends and not be like, you need to transfer me now because I can't afford it. Or before the facts.

Like you'll have to pay me before. I bet people clarner it sometime. I think you can. You can clarner a day out on like in the National Trust. You can. You can, clarner experiences. Like you can literally,

like if you can't afford to go into the National Trust for the day. What they're parking? Yeah, no, like a ticket. If it's entry ticket. Oh, okay. You can clarner experiences. You saw, where did you see that? I don't know and I was like, oh my God.

You can't call her an experience. You can't have a vet now. Yes, we saw that in the creative, didn't we? I was like, a very shot. And then I was like, actually, there's an emergency like, we're all animal lovers. That was the one thing that, when that got sent, I was like, I was like, whoa.

And then I was like, you know what? My cat is the one thing that you would take the hip for. But apart from people that are super struggling in a really, really stressful financial situation, a tough situation. Well, parks at that. So people that aren't that, your pet should be in your budget.

They're important. They're a loved one. Like, there should be a pet sinking fund. I know there's a load of stuff that's going on at the moment. It's really interesting. Isn't it about most vets? Like, I think it's, I don't know the percentage.

Let's make up 90%. Something big are owned by four conglomerates. And then the same companies own the insurance companies. And the same companies own. on the medication companies. So they're all in it together. So it's a handful of independent vets. And often the vets that work in,

the practice are not the owners. And there's like, it was a big thing on BBC breakfast. Yeah, it's all connected, isn't it? That's why the prices keep going up and up and up. And there's no cap on anything. It's crazy.

Regulation is kind of definitely needed. But it is that pets should be in the budget. Yeah. My friend owes me money and seems to have forgotten, but I'm too scared to mention it to her. Jail. I feel really about that. I feel sorry for you.

So it's like, Jail, I feel sorry for you. You know, like it's awkward. If you don't have the confidence to address someone about money that they owe you,

it's really stressful. We are confident about money and we would find it awkward if you had to chase. That's just embarrassing. On their part, mostly, and that's what I want you to, like, take away.

The embarrassment should lie with them. for not remembering or like avoiding or whatever it might be. Have you guys been in a situation where someone's owed you money and you've, there's only so many times as British people we think we can chase and then we go, I can't think. I don't think I have. I've got quite a reliable friend. Yeah, that's good.

No friend. Yeah. Because you could have done Harry style. I'll pay next week. I'll pay next week. Yeah. Yeah. Yeah.

Yeah. Who we were talking about when. I hope I'm not done it to anyone. I really hope. No one's not there going. That's the thing. Can you do anybody tell me? I've got an awful memory.

Our family group chat is literally my mum just being like, I'm going to my suspense this day. Does anybody need anything at us sending? Like, can you get me? This, this is over the weekend. And then like three days later it will just be like, right, Holly, you owe me, 27 pound 50. Laura, you owe me.

Our family just exchanges money. Like just this like big circular economy. We or someone, someone was talking about where I'll be anonymous in case. I shouldn't have to be sharing this, but a parent lent money to get on back on feet and to get back on it. And then it keeps being you, okay, I do know who it is now. They'll be happy with me seeing it like this in this way. There was a moment where a parent lent money and not a lot, like absolutely not a lot. We're talking like $1,500.

And then the relationship has since deteriorated a little bit. And suddenly, oh, gay. money like yeah suddenly it keeps being dropped in now and it's like well you know there was that money and i think the planning to pay it back and i one did completely forgotten about it was a moment in the life when it was like honestly this person was going through something super super tough very very overwhelming and did not have the finances and needed this money and it should your daughter and it's so sad and i was we were debating about whether she should and i i was like oh have you got f you money give it back if they because they've not

got that over you then if someone's using it. Yeah. This is not what we're talking about. We're talking about being scared to ask. And this person wasn't scared to ask. I made it very clear. But it is a funny dynamic. I always like to think that if like we,

we lent someone money, it's like also write offable. Yeah. Like we never, you just don't lend money. You don't lend money to your friends and family. If you're not prepared to leave it and you can't be terms to it. There can't be this like,

yeah. Stressful. Imagine. Oh, Lucy, you did scripts, didn't you? I think so on talk. We can post that again. Yeah. Yeah.

Definitely. Scripts of what to say to people. And there's like a nice version. There's brutal version. There's a direct version. And you might work your way through all three. You'd like, you'd start being. Well, you would.

You wouldn't be like, give me my money back. You'd be like, oh, hi, I'll lend you that money. Like, when do you plan to give it back? And then the second one is a bit more like direct. Good thing is, Monsa request. Yeah. I like that feature. Over and over again.

Bing, ding, bing. Well, that's why collective exists. Our friends got an amazing business called collective. They've done like hundreds of millions of pounds of payments. And it's so that the person, the organiser, doesn't get left out of pocket. And if there's a hendo or a birthday present or a teacher's present and someone does that where they fund it and then other people, oh, it's really annoying to have to keep chasing and to be that person. And some people just really forgetful genuinely. And some people are actually a bit rude and avoid it.

Try the look. Try it on. And so like if you can like depersonal, like, do it. the service and make it automated and go, yeah, if you want to contribute, if you want to be in, your money needs to be in this account by then. And I think sometimes I've done a collective one before where I've got the money ahead of time. Always. The tickets aren't live, the 20 quiddy. If you want in. Yeah, like, we do like a Spice Girls night. I was not the sported. It was a, it was a, not the tour. It was like a Labor Club vibe. We had a great time.

But I think I knew it was coming on sales. So I was like, oh, does anyone want to do? this. Should we all? Like, I was quite organised for myself and she even shocked now, but was like, oh, it's 20 quid each on it to this. And then I had it all ready to go. Not that I couldn't afford it. I could have done it, but I thought, well, I'll just be organized and do it. Yeah. Should you lend money to family and friends? What is an F-OF fund? How do I build my emergency fund? Well, we're so glad you asked. Head over to financial.com where we tackle the money topics you actually care about. Okay, time for our first dilemma. Should we reduce our mortgage term or keep investing? Hello, financial.

Chal Queens. I hope you are well. Not an intro. I was listening to your podcast on overpaying your mortgage with interest. My husband and I have a joint savings account which has just matured. And we were wondering about putting some of it towards paying off our mortgage. When I've looked into it, there are actually two options. There's overpaying which reduces your monthly payments, but your term remains the same, so you will still pay lots of interest, or there's reducing the term,

where the monthly payments stay the same and the length of your mortgage. mortgage reduces, so we pay less interest. I was thinking of doing the second option, since we can already afford the current monthly payments. Our bank has said they automatically apply the payment as an overpayment if it's over a certain amount. So we'd need to ask for it to be dealt with differently. There also doesn't seem to be a limit on the payments you can make to reduce the term in the same way that there is for making overpayments. We've thought about continuing to save or invest the money, but as our cheap 1.24% mortgage is due to expire in May, we think that the best, we think we'd be best making off a, sorry, we think we'd be best off making a payment to reduce

the term. This also has the same effect of bringing our overall mortgage borrowing total down to, so win-win, what do you think? Thank you for your advice and keep doing what you do. I love how you get me thinking about finances and the different opinions you contribute. lovely glowing review. Thank you. And just amazing that people are sat thinking about them. Like obviously a lot of our stuff is dilemmas and especially when they're intense ones. Like we want to be able to help the person directly. But I love that. I love that. You're driving a long, or running along or walking along or doing whatever. And you go, okay, actually, what, what would Finchelle think? Like, what would they do? And if you want to be

shocked and face the music, you need to look at an hour. amortization schedule or graph, even the schedule is a bit more boring and a bit more numbery. But basically what that is is looking at your mortgage and your mortgage term and looking at how much capital, which is the actual loan you pay off each month and how much is interest and how much by the end of the term the bank ends up getting. Now, I know they've lent you an awful lot of money and they want to be paid for that and sometimes it's a nice cheap interest rate. sometimes it's not. Because it's like spread out and because you get the house.

So many people are so focused on that. And if we didn't do it, people wouldn't own houses because you can't just go around buy houses easily with cash. But it's unbelievable how much banks make an interest. And so when you start to think, like someone says to me, why do banks like give you switching deals? Why do they give, why would someone give 200 quid for your business?

I'm like, why do you think? Because it's not. necessarily like your little savings account where you make a little bit of money. But it's the fact that you might open up an Isa with them and then you might invest and they'll get some fees. But ultimately, it's because you're going to borrow. And it's because if they can switch sell you, a mortgage switch sell, not switch sell, but if they can oversell, oversell. Upsell. Upsil. Upsell. Jesus Christ. Sorry, guys. If they can upsell a mortgage to you, that's where the money is. So your $250,000, sometimes, most of the time, in one mortgage payment,

they're making more from you than that 250 grid. Way more. Now, yes, they've got lots of costs. They're running a bank. They keep your money safe. They borrow as well. You know, there's lots of things going on. It's not as simple as pure profit. But it's revenue. So they're bottom line. And we can. And I think we've done some work with Spride before with the app where you can get cash back and they pay it off your mortgage. They really helped to show if you just did your like asda shop through Sprive, what that can knock off your mortgage. But if you're making actual big chunky overpayments, it is definitely tens of thousands of pounds off a typical mortgage if you've got a long term to go. But don't underestimate how much you can save by overpaying your mortgage.

And don't get too overwhelmed by lots of people say to us, should I invest? Should I overpay? There's lots of pluses and minuses. I think we've got loads of really good articles on it. won't recall all the reasons for and against now. But just think that three. What I always like to think when it comes to overpaying any debt, not just a mortgage, is maintain your minimum payments and pretend that, maintain your payments that you have to make.

Don't reduce those. Crack on. Anything is a bonus. Anything that you look at your rem overpayment penalties. Sometimes it's 10% of the remaining value. And so sometimes people look at that and go, right, okay, how much have we got? So me at the moment, my mortgage is like $2.90.

which means that just under 30k a year, I can overpay if I want to. Now, in practice, I don't. I don't overpay that much, but I do overpay some, and I do extra pension investments, and I do extra extra extra extra investment. But that's more because I don't want all my, like, wealth tied up in a building. I want diversification. I've got a really good amount of, I've got a rental property and a house property. So I have equity in property.

I am benefiting from that growth. But also, like, if I needed access to cash, I don't have to sell my houses. Yeah. So moderately, I overpay, but I have money in Ices, which is accessible before a pension. I've got money in an emergency fund and I've got a pension. So, but sometimes you, your extra is 10 grand you can pay. If you've got 100 grand left on your mortgage, you know, 10%, you can only pay 10. And you might have more money than that, so you have to divert it elsewhere anyway.

But I think you're in this position as well, aren't you? You are like, you've got a sweet deal coming to an end and you are very, you're very conscious of suddenly what a new payment could be. rate could be. So it's not a bad idea for you, is it? No, we've already started. We looked a while so for transparency, our mortgage interest rates are 1.19%. Laura's like, screw you. It's about time you join the party. I was a 4.5. I'm about to come down on my rental. Oh, that one's a six because it's a rental because it's people don't realize that by, oh my God, I forgot that. That's coming down to, I think, a 4.5 in a rental market one and they're going to recheck it again in a

couple months before I commit. But I'm sure it's a six. And so it's crazy, isn't it? It's just absolutely, it really, really is. And so for people that have cruised on a one. I know. But we, we looked at this. We were looking at the calculators, the amortization graphs and that kind of stuff just to see where the land lies. Like, should we absolutely be hammering it? Because we pay into, you know, investment accounts as well. And I overpay into my pension massively because I'm trying to close the gaps that I accrued when I was on maternity leave and all those types of things and on a lower salary than I am now. So I'm trying to catch up in loads of different areas.

So there were options like should we just club together all the excess that we've got and throw it towards a mortgage. But we have made, we're happy with the amount what we're kind of do in overpayment every single month now. It's under the 10% threshold way under. But it does make a difference. If you look at overpaying by even £100 a month, it can make a huge difference on the capital that you're paying off, not the interest.

And that's what people don't realize. knocks down the loan. Yes. And then therefore going forward, the interest rate on your mortgage is calculated on the remaining balance. And that's when the immortalisation graphs and schedules. And they've got them on like on the government websites, on lots of different websites you can find them.

Maybe we need an aesthetic one because sometimes they're really dull. You can see like where you make the overpayment, the jump and the jump down and the, and the steps that you skip. And usually that ends up reducing obviously the term. So do that rather than like you want to be debt free. earlier, a mortgage fee earlier. You don't want to have it hanging around the same amount of time and just reduce the amount you pay.

So I would assess, like, how, what are you doing with the other stuff? Once it's gone, it's gone off that mortgage. And so that's a big thing to think about when you're paying a big chunk or a little chunk, you can't get that money back unless you sell the house or let you remorgage and borrow again. So be really sure. But once you're sure, get it gone and keep your payments the same. I've all throughout that conversation, I was thinking,

is a mortgage a scam people don't know people why would we because when do you get I know obviously you get your house and everything but at what point does and it's like

oh but you're building equity and something you need that equity you're never going to like cash that equity out because you need the house I know obviously you're living in it

and you get that anything everything but like why is it so well you need well I think so the more riskier people and the world will talk about leverage and about how.

And there's some really interesting stats and we can probably go into it, but on like an article one time showing that what, let's see if I get this right. When you buy a home and you put 10% down, let's say this is doing super easy math for you and me at home, you're going to buy a house for 100 grand and you're going to put 10 grand down. And then what happens is you, if the value of the home, goes up, you pocket the percentage increase on the whole. So you've put 10 in, but an asset of a hundred grand is going up in value. Yeah. So your return then is based on the whole, but that

doesn't account for risk of it also going down in value and extra. Which it can. But that's why people talk about leverage being so cool, because you could, you could buy, um, with a, instead of getting like 100 grand and putting 100 grand to stocks and shares, you could buy 10 houses, for 100 grand. And so 100 grand's bought you a million pounds worth of real estate. Yeah. Because you've put 10 into each of them. And they're all 100.

So the value of the real estate is high and you've only had to put in 100 grand. Whereas if you put 100 grand to the stock market, you're only making returns on 100. So leverage is how people talk about it. And that's a, it's a bonus for some people if you ride the wave. But also, obviously, if mortgages are called in and these mortgage notes are called in and if values go down, you still have to pay the mortgages for them. So it's it's not a scam in that it can be used like for good rock profits and good good upsides, but the sunny big downsides. And no one ever looks at the interest that you pay. But that's what I'm like in my head. Yeah, so you've got a hundred

grand house and even like when you've paid it off and say let's say how much track in the way they would have paid in total including interest. It depends on. It depends on the interest rate, but you could have in the end borrowed or paid back double what you borrowed. Yeah. So then even if your house goes up by, I don't know what's like, what percentage does the housing market go up. It's over a long period of time and that's the problem. And, you know, sometimes you may have beaten the market, but that might have been like our parents generation. It's so unsure. It's because there's no other way of getting on the property lot because people don't easily, the time it takes you to save the cash.

to buying cash, house prices have gone up in that time as well. Yeah. So it's really difficult. But it helps to show that just overpaying a chunk here, a chunk there can dramatically reduce the amount of money you paying interest. And then when you get to the point where you're mortgage free, the idea then is like invest it. Yeah.

You know, what you're going to pay on your mortgage payment, put that into the market. And that gets exciting. And you kind of catch up later. But slow and steady is always the thing. And not over borrowing and not. Yeah. You know, like if you only put. 5% down, then you're borrowing 95% of the value of the property. There's so much interest.

High interest rates means you're paying way more in interest than you are knocking off the capital. And honestly, the worst thing I can tell someone to do is go and do a mortgage calculator now with an amortization and look how much you pay off the mortgage in year one. Don't look at the payments that you make. What goes off the mortgage? You are going to cry. Yeah, you will. And that's even if you were putting down like a massive deposit. Less so more because the, yes, sorry.

Because the number is still the same. Yeah, depending on what you've borrowed. You may get a more favourable rate if you put more money down. But ultimately, year one is like a sliding scale. And the last year you pay the most off your capital and the least of interest. Yeah. year one, no matter what the loan combination, year one's the first. And it's just awful. I feel like I'm on the big short. Did anybody watch that film? Ryan Reynolds.

I have watched it because I think Laura told me to watch it like this. Two years ago. And you just watched it four times and you still don't understand everything. I was watching an old episode of Gogglebox things told you today with Teddy's like found goggle box and he thinks it's absolutely hilarious. It's totally inappropriate for him. But anyway, that's by the bye. And then we were watching one. And it was in lockdown. It's like a really old one and the woman's watching line of duty and she's got a pen and paper

and she's like Katie, dead. Right, okay. To keep up with who's who. And like the big short is like that. You've literally got to go. The amount of time I said to Neil, rewind that again.

Yeah. Pause it. Explain that. Yeah, it breaks like the fourth wall. Ryan Reynolds. He's like talking to the camera and he goes, Margo Robbies in a bath and she explains something as well.

Neil's obviously like, rewind that bit. What does she say? Listen, if you're looking at Ryan, I was not saying. Fair play. But it is that whilst it makes sense, we just all take it as a given. And then I'll get a mortgage. And then I'll, you know, and when someone rushes into the wrong house or like remortgages this stamp duty, there's so many things that when you do the modelling and you work out like the cost of some of these things,

historically we've seen big house price increases. and but I love the when someone goes oh should I overpay the mortgage should I invest in the market I could make more in the market and you always go but

what makes you feel better and what I don't like is seeing the fees that my bank makes from my loan I don't like it I don't you know when that's gone

I will feel great it's all about personal preference I've got a question what do you think she should do what would you do if you were her, go with the latter.

Second option. Yes. So I would, given it sounds like, go down the playbook, has she got emergency savings? This sounds like savings because she says it matured. Yeah.

So that needs to be extra stuff. And it's still down to how you feel because if you've chosen to take out a mortgage for X amount of time, you've got that planned anyway. Yeah. Are you investing? And it sounds like, you know,

she sounds so, and so up to stuff that I wouldn't be surprised me if she's already investing. And for me, like, this is an opportunity, Holly, like, if you're behind in your pension, do you look at it? Yeah. How, if you want to get ahead on the mortgage, because the rate's going to go up. But the rate will go up on a month of payment basis. And so the new mortgage might bring the payment down. It might make it more affordable. Yeah. It's all about how liquid do you need that cash? Because once it's gone off the mortgage, or when it's gone in the pension, it's gone. Yeah. But it's a great financial decision. So if you have access to liquid,

cash. It's like great. We've done that before you do a chunk and you go, I've never done a chunk. I want to do one. But don't save up and do a chunk. No, no. It's if you come into it. Yeah, yeah. No, that's what I mean. I've never like come into a chunk and go out. Like imagine if you got a bonus today, that's where you get that opportunity because you might be like, oh, go on, I'm going to give you a 10 grand bonus today. Yeah. Yeah. I'm not. No, I think we've always talked about it because we always say, if we always have the question. We should all know the answer to this. It's still at work. A good test. if you 10 grand landed on your lap today, like what would you do?

You should know straight away and hours would bid to pay, overpay the mortgage. Because, and all our other stuff started. Because you're in Grow. So you've got your emergency fund. You've got my travel fund. Got the travel fund.

There's a lot of people say, oh, go on holiday. I'm like, I'm going on holiday. I've got my sinking funds ready to go. And it's not a great financial decision to then do extra spending. This is a thing. People come into extra money,

you do extra spending. We'll leave you budgets right. And you already invest and you invest in a proportionate, regular way. So that's happening in the background. So you, would?

Yeah. Would you do 10? Would you treat yourself for the bit? I think I'd probably do like eight. What do you do with two? Going on another holiday. What else? I'm not getting you door because guys,

doors are really expensive. I just paid for windows to be done. And the quote for the door and the back door is three and a half grand. No. No one sees the back door. Keep the door you've got. Are we only on down number one?

Yes. Sorry. It's great. We have just done an episode of the big short but in financial style. Yeah. Okay, time for a second dilemma. Struggling to make it to payday,

the financial app helped me track my money, pay off debt and finally feel in control. I've built savings, I've started investing, and I actually feel financially well. Download the Fanichel app and start your money comeback today. Do I share my inheritance

as an unmarried, cohabited couple? Oh, God, this is number two. Gold. To be continued. Hi girls, I hope you're well. I love the pod and look forward to it every week. I've been waiting for the time when I had my own dilemma and it turns out now is the time. A week ago, myself and my partner had an offer accepted on a house. We are both first-time buyers and have been waiting for this moment for a long time. We have been living together at my partner's parents' house for

the last year. We've been together for three and half years. For some context, I'm a chartered accountant and my boyfriend is also due to become chartered at the end of this year. We are both 24 and we have lived at home, bill up significant emergency funds and are aiming to put down a 20% deposit. We have no debt and are investing monthly in index ETFs. We are splitting the mortgage 50-50 as we recognise that it's only a few months difference timing, wise, before both our salaries are the same. Here is the dilemma. I had a conversation with my parents last week and they told me that they will gift me 2K towards conveyancing fees and 2K towards furniture, fixings and fittings. This was unknown to me, but they have done the same for my siblings. Our plan was to split

conveyancing 50-50, along with all the associated house costs. I've agreed to spend a bit more upfront if needed and he will repay me once he is qualified. I'm unsure how to split this money and whether I treat it as a gift to both of us or whether we continue to split the conveyancing and furniture 50-50. I haven't told my partner yet, but I plan to as we are open about money. His parents are in a different financial position to my parents, so he's unlikely to be gifted any money. However, in the future, it is very likely that he could receive a sum of inheritance. What are your thoughts about the money that I'm imminently due to be gifted and any future money which he may receive? Everyone, like, no one's messing up. These are all really helpful.

Yeah, great. So if you're listening to this and going, everyone's got to the shit together. They've not. We've just like, this is how it's been skewed. This one. Really, really impressive dilemmas and people that really, really organized. So don't feel like if you're not empathizing with some of these dilemmas, you're not going to like 20% house, was it? Wow. Like, not many people can do that. I think it is important that they've been together three and a half years, still not married, which is absolutely fine. And you can want to keep finances and assets separately. And that's okay. And it sounds like you're both accounts.

because you both are very organised about this is what we've agreed and I also love the idea of being in the room when you're like you gave my sister what yeah I didn't know about this you know like you help them out yeah well so yes I'll take it and so what a lovely gift to be given and I do see it as a gift and be interesting I'm going to ask all this one as well because I wonder if we were in that scenario what it would feel like there's part of me that's kind of going no no you've got a plan to buy the house 50 50 you're going to be very closely earning together in not long period of time and you're going to be very closely earning together in not long period of time and I would not feel that I had to put it into the central pot. So I would hold some back that was mine. But you're going to buy the house. You're going to want something. And you're going to want it. And if you want it, you've got money to go there. So that's a great gift for fixtures and fittings, which is like a lovely term.

It's not loads actually. House has cost so much money. So instead of like throwing it into the middle straight away, generalising, but as a female, there's going to be something that you want and that he won't have the money for because it's not planned. And so when you get that, it will be for both of you, but it's a gift from your parents. So I think you should get more time to decide what that's for. If this was something where like he was struggling and couldn't quite pay all the fees and I'd be tempted to push money towards that though still and yeah, you pay me back later. And

if you've got that good relationship. Yeah, to make it easier, could you like maybe focus on the tangible things? Then you can be like, look, if anything ever happened, I've paid for the bed, I've paid for the dining room table, I've paid for the sofa. But the same time, you don't want him to be living there going, she owns everything. Like, I don't own anything and her names and everything. I don't want it to be like that.

But to make it easy, you've already saved, it sounds like you can afford the conveyance and fees. It sounds like you can arguably afford the fixture and fitting. So see it as a gift. And then like Laura said, actually buy the stuff that you want because there's a temptation when you buy your first home and you buy the everything cheap, Ikea, like the cheapest of the cheap where you could actually like, no, no, do you all, I'm going to invest in a nice bed, a nice mattress because of really

expensive things, a dining room table, look, a really expensive chairs, all that kind of stuff. Maybe. I think so. And I do think, look, we want you to be pragmatic and practical. And when you started to read this, you know, let's, if you had a zero onto that gift or, you know, or zero is big enough, isn't it? Like, say if there was like 2040 grand suddenly, then I would absolutely be recommending

that when you are purchased in the home that as part of the lawyers suggest it and you could go around the back to the lawyer, by the way, and be like, okay, but parents will give to me this. They're very, they've told me I have to be a bit more savvy, whatever you want to say, whatever script you want to use, but kind of carve out that and say that this is mine

because we have got scenarios and we've talked about today, even in this room, where we've learned of a separation of someone and it's quite quick and it's something where you go, oh God, like we didn't foresee this. You want everything to be documented and very, very clear. And so having the lawyers do those chunks are really, really important. But there's nothing to say that you also can. Over text message or over email, it's weird with your partner,

but kind of say, look, so that's what I would do. I would be like, I would say to Carl, my mom and dad are actually going to gift us. No. Sorry. Me. You're going to gift me. this like they have my siblings. So I'm going to buy sofa bed, this that we can use in the house. She's super careful with the language, which is a lovely, non-pressured way of saying,

that's mine. So if in a month, we back out of this or if in a year you walk away, I pick the couch and it's mine and it will be taken into account if you disputed it. This isn't life, it's a lovely amount of money. I don't want to play it down, but it's also not too significant you had to feel a bit sick about it. Or get legal advice to like work out what to do with it. Yeah. You're both accountants. You'll start it out of everything. You've been that scenario. Do you agree? High level? Like if you guys were in that scenario and you were buying. Yeah. How would you handle like a four, five grand gift that you'd already paid for everything so you didn't need like to buy the house? I'd be like, do you want to go on hold it? Yeah. I knew that was

coming. Do you want to pay like your list of subscription? No, I think if it if it was gifted from parents because that's a bit weird because they're like on what you're spending it on. Yeah. I think I would just be like this is ours. Chuck it in the pot. Yeah. Yeah. Which is unexpected answer from me because I'm selfish.

You are so into this engagement lifestyle now. You've changed. I don't know you are anymore. I'm becoming more fair. But great questions and best of luck with the house move. Very, very exciting. You are so organised. And listen, also holding it back, something's going to come up.

You buy a house. Yeah. You'll want something. You'll forget about some curtains. something will be upsettingly expensive because it's adulting and you'll have to find some money. So what I love the gift from your parents. That is all for this episode. The Vault is now close.

And just a quick disclaimer, The Vault is just a chat around life of many topics. We're not giving financial advice. Just a little reminder that if you're finding the Vault helpful, you can support the podcast by following, rating or sharing it with someone you know. It genuinely makes such a difference.