I would suggest that you don;t have to go down the all or nothing route - you can have part of your mortgage on interest only and part on repayment if needs be. First thing to remember is that you should have around 3 months salary in an easy access account for emergencies. Cash ISA's are worth looking at for their tax efficiencies (up to £3,600 per annum). Them consider what you need to put aside for holidays etc, effectively do a cash flow for the year (a good IFA will help you do this). That will show you what funds you need to have where and how liquid they need to be and the level of diversification (spread it around a bit!). I would also suggest having as much of your mortgage on repayment as possible - it may be even worth extending the term to have it all on repayment. There are too many clients that have been referred to me that are still on interest only when they should have gone to repayment a long time ago!!

Regarding insurance, you should consider life and critical illness and income protection as minimums, and on an increasing (RPI) basis where possible.

This may also be a good time to consider your retirement options as it can be mighty hard work saving for retirement the older you get. A 29 year old wanting to retire on £10,000 per annum at 65 would probably have to put away £184 (net of basic rate tax relief) per month (increasing by 5%pa)! Bear in mind that (apparently) a 29 year old male has a 64.7% chance of reaching 85 years old (74.1% for women). That mean that your retirement fund would need to last you 20 years or more. The above figures exclude state pensions as there is no guarantee that they will be around or available at that point.

Your best port of call would be an IFA who can discuss all of the above, as a mortgage adviser would need to outsource anything to do with pensions, savings and/or investments.

Proper Prior Planning & Preparation Prevents a Poor Retirement

Brian