My principal is not reducing

Hi guys,

I have an investment property purchased in June 2007, there was €211,500 borrowed from the ptsb. The 25yr mortgage was initially interest only for first 2 years @ 4.99% (€879pm).
After 2yrs I switched to a residential investment tracker @ 3.35% (€591pm). At year end 2014 the mortgage is at 2.40% (€421pm) and the balance remaining is €211,747, surely there should be something coming off the principle by now??? Any advice greatly appreciated. A

€211,500 x 3.35% = €7,085 pa or €589 per month in interest.

€211,500 x 2.4% = €5,076 pa or €423 per month in interest.

So you are paying interest only!!

Hi joe, thanks for the reply, so basically, when I requested to come off interest only fixed after 2 years and chosen an investment tracker and I have ended up with an interest only payment structure on my investment tracker. The phrase Interest only is mentioned nowhere in my documentation but I guess I should have copped it from my statement. I need to get off interest only, does it effect my tracker in doing so? Should my payments increase dramatically?
I need to go talk to ptsb but appreciate any advice before doing so.

If you have a tracker on an investment property, you are getting tax relief on 75% of the interest

Interest rate: 2.4%
75%: 1.8%
Tax relief: 0.9
Net interest rate: 1.5%

If I had a rate like this on an investment, I would want to keep it as long as possible.

If you have other debt e.g. a mortgage on your home, you should pay that off first, assuming the rate is not below 1.5%.

Brendan

Hi Brendan, yes I definitely don't don't want to lose my tracker.
I do have another debt (mortgage on my home) but this is a much older tracker at a rate of 1.150%.
My main concern at continuing paying interest only is the 211K debt at the end of the full term on a house which is currently valued at 110K.

btw: congrats on the site, its an invaluable source for financial info.