Putting inheritance towards a mortgage - good idea or bad idea

A

andrew_

Guest
Just looking for a bit of advice. I just inherited about €45k and was wondering if it would be a good idea to restructure my mortgage. I am on a 35 year mortgage with AIB with only just over 2 years gone. I have roughly €225k left. It's on the SVR. Really what I'm asking is
1 should I just make a once off payment to my mortgage?
2 restructure to shorten the life of my mortgage
3 keep the cash and invest it in a saving bond
4 any other ideas out there

Hope there's enough info there
Thanks
 
Are you in negative equity at all. Can you manage the repayments ok at present? How secure is your job? These are important questions to ask before you decide.
 
Thinks for the Q'S... I am only slightly in negative equity but by no means boom time neg equity amounts. Bought my house in 2010. I am making my repayments comfortably right now and I am in a permanent semi state job so dont see why I should not be able to make repayments in the future.
 
I put 100k inheritance towards my mortgage because I was worried about down the line as niceoneted points out - job, payment size and so on.
As it turns out it was a very prudent move as work is bad and the rates have gone up, pushing the mortgage up by 22%!.
But because of the lump sum, even though I am being roasted, I am still hanging on.
I doubt it would be that way if I didn't put cash to the loan. I would be in serious trouble.

There is also the amount of money you can save on interest if you put some against it.
And what are the chances of you ever having 45k in your hand again soon if ever?
Don't rush in.
 
Do you have any other savings ?

Reducing your mortgage saves a lot of money, but it is a very long term savng strategy, and it is very hard to unlock the savings if you ever need the money. If you ever need the money, you will have to ask the bank for a remortgage and they might say no.

If you are lucky enough to have money to save, thnk about three types of savings

1) short term savings - holiday, emergency house repairs, big medical bills etc

2) Emergency fund - what if you lose your job, what if the car breaks down, what if the roof comes off the house

3) Medium term / long term savings / pension

if you have 1 and 2 sorted, think about 3. There are lots of different saving/investment stratagies. The best one will depend on your age / pension provisions etc. If you are a permanent semi-state then, you probably have a decent pension plan.

It reallty depends on what you think you would like the money to do for you (income now, lump sum in 10/20 years).

do you think you will want to do an extension to your house, when you have kids or when the kids are older ? if so, put it away for that.

if you decide what the money is for, the strategy will be clearer.
 
@Roamer808 and @Huskerdu - Thanks for the replies. I think I need to sit down and work it all out from what you are saying. I am edging towards some elements of savings at the moment and maybe if interest rates go skyward I can use it to control things then.

@Brendan Burgess - great link. Need a bit of time to digest all the info!
 
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