PAY DOWN MORTGAGE ON RENTAL PROPERTY?

Discussion in 'Money makeover' started by JJ47, Sep 20, 2016.

  1. JJ47

    JJ47 Frequent Poster

    Posts:
    25
    Last edited: Sep 20, 2016
    Age: 45
    Spouse’s/Partner's age: 43

    Annual gross income from employment or profession: 35000
    Annual gross income of spouse:55000

    Monthly take-home pay 4500

    Type of employment: public servants

    In general are you: Saving
    (a) spending more than you earn, or
    (b) saving?

    Rough estimate of value of home €250000
    Amount outstanding on your mortgage: nil
    What interest rate are you paying?

    Other borrowings – nil

    Do you pay off your full credit card balance each month? yes
    If not, what is the balance on your credit card?

    Savings and investments: 150k (130k earning about 1%, 20k c.u earning less tham 0.5%)

    Do you have a pension scheme? work pensions

    Do you own any investment or other property? yes worth about €85k mortgage of €55k

    Ages of children: 7,10,13,15

    Life insurance: yes (only 120k)

    Hi

    I am wondering would it be more beneficial to pay off rental property mortgage. I have about 11 years left to pay on 55k. my mortgage is €523 per month while income from property is €473 (less any expenses that may occur). I am subsidising mortgage of €600 per annum. I always believed it was beneficail to have a mortgage on the property in order to write off the interest on tax return, however, i am wondering is there any benefit of it at this stage, due to the small amount of mortgage interest and it being only 75%. Anybody advise please?
     
    Last edited: Sep 20, 2016
  2. cremeegg

    cremeegg Frequent Poster

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    1,177
    What is the interest rate on the mortgage ?
     
  3. JJ47

    JJ47 Frequent Poster

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    25
    Mortgage rate is 3.95%
     
  4. JJ47

    JJ47 Frequent Poster

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    Any advice would be apprecieted?

    Thanks
     
  5. Setanta12

    Setanta12 Frequent Poster

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    889
    Interest only or principal+interest mortgage?
     
  6. Sarenco

    Sarenco Frequent Poster

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    3,061
    I can't see any good reason not to pay off the mortgage in these circumstances. Go for it!
     
  7. Joe_90

    Joe_90 Frequent Poster

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    2,007
    Unless you can get more that 3.95% x 75% x 50% (assuming you pay tax at 50%) or 1.48% on the funds you should pay off the loan.
     
  8. JJ47

    JJ47 Frequent Poster

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    25
    The mortgage is principal + ineterest
     
  9. JJ47

    JJ47 Frequent Poster

    Posts:
    25
    thanks for replies. the mortgage is principal + interest.
     
  10. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,061
    That doesn't really matter.

    You will still have plenty of liquid savings after paying off the mortgage, you have no other debts, your pension/insurance arrangements look sorted and you won't get a risk-free return in excess of 1.48%, after tax, anywhere else. It's really a no-brainer in this case - pay it off.