Buy house outright or keep Shares ???

[tbs1983]

Hi all,

I've Been fortunate to recently inherit approx £50k in cash, and £100k in Shares (all Blue Chip FTSE100).

I currently owe £73k on my mortgage which has 24 years still to run (only taken out last year).
The house is worth approx £100k

I would like to sell the house I live in, and pay off the mortgage which would leave me with approx £20k
to add to my inheritence. This would leave me with £70k cash plus £100k Shares.

I would then like to buy a bigger house worth approx £150k, and use some or all of my £70k cash as a deposit.
I would like some advice as to whether you think I should sell some (or all) of my shares to buy the
new house outright without any mortgage, or should I keep the shares for Growth and Dividend and take out a mortgage for approx £80k.

I am 32 years old and earn approx £28k annually from my work and could comfortably afford an £80k mortgage over 20-25 years, keeping my shares intact, but the thought of being mortgage free is very appealing.

[corn18]

I wouldn't be in a big rush to jump into big moves right away. Take a deep breath, focus on the present and ask a lot of people a lot of questions.

Please tell us more about the FTSE shares. Are they just a few individual stocks or something more like an index fund that tracks the FTSE100? It matters in so far as you may not want to have all your eggs in a few stocks.

Another question: What is the cost basis of the shares? When you inherit shares in the U.S., the cost basis is reset to the day you inherit the shares which means you can sell them without paying any capital gains taxes. That is handy if the shares have a significant gain. If it doesn't work that way in the UK, then the tradeoffs get harder.

[snafu]

What is the interest rate on your current mortgage? What are the best terms & interest rate on proposed 150K house? fees? Are there income tax ramifications selling and buying a principal residence? When you review the mortgage amotorization schedule, how much do you pay in interest over the whole term? Are there provisions in most UK mortgages that allow you to pay extra sums directly to principal?

Do you have a retirement fund or defined retirement pension appropriately funded for your age and income?

I know past performance is not a guarantee of future performance but I would attempt to work out performance average of FTSE 100 over the past 5 years and postulate 5 years going forward. I'm making that suggestion because we are being hard marketed to buy a European fund. What mortgage interest saving would result if income/dividend/capital gain from Index stocks were applied directly to principal quarterly/bi annually or annually keeping capital intact?