Agreed. Probably better off putting cash into Trade Republic and earning 4% and then using it to get mortgage to beliw 80% LTV if needed when fixed term comes to an end.I wouldn’t be in a hurry to pay down the mortgage, at 2.25% it’s not expensive.
Due to receive 35k early 2024, is it best all to go against mortgage or somewhere else for education fund?
There is value to having cash on hand that can be withdrawn without notice or penalty if needed. The OP's position is not such that he needs a large rainy day fund at the expense of return on investment, but if a rainy day fund can be achieved at no cost, or in fact with a bonus of about €350 up to the end of the fixed rate, then that is what I would do.Well, you could put the €35k on deposit for a year @4% and earn a grand total of €262 (after tax) more than you would save by simply paying it off the mortgage @2.25%.
Depends what value you place on your time, but I wouldn’t bother jumping through all the hoops of opening another account and filing a tax return just to make €262 - I would simply pay it off the mortgage.
Beyond that, I think you should both prioritise maximising your tax-relieved pension contributions, relevant to your respective ages, over paying down your mortgage ahead of schedule.
Your mortgage balance is already fairly comfortable as a multiple of your joint income and, well, you’re not getting any younger.
If you do find you are building after-tax savings (after maximising your pension contributions), then just throw it at the mortgage until it’s gone.
Keep it simple.
I’m probably being thick but how does a 4% return on 35k = €262 after tax?Well, you could put the €35k on deposit for a year @4% and earn a grand total of €262 (after tax) more than you would save by simply paying it off the mortgage @2.25%.
Depends what value you place on your time, but I wouldn’t bother jumping through all the hoops of opening another account and filing a tax return just to make €262 - I would simply pay it off the mortgage.
Beyond that, I think you should both prioritise maximising your tax-relieved pension contributions, relevant to your respective ages, over paying down your mortgage ahead of schedule.
Your mortgage balance is already fairly comfortable as a multiple of your joint income and, well, you’re not getting any younger.
If you do find you are building after-tax savings (after maximising your pension contributions), then just throw it at the mortgage until it’s gone.
Keep it simple.
It's the differential vs paying down the mortgage I think.I’m probably being thick but how does a 4% return on 35k = €262 after tax?
Sarenco said €262 would be how much MORE than the € saving made by paying this off the mortgage. Not the isolated interest on €35k @ 4%I’m probably being thick but how does a 4% return on 35k = €262 after tax?
I've gone back through our policy cover and yes it was worth the review to check what's already on office and balance whats worth the upgrade thanks for highlighting.Do you have adequate health insurance for your partner that covers% of IVF? With your timeline you might have sufficient time overcome any waiting periods on any upgrades but you would want to check the t&c etc
There is indeed.There is value to having cash on hand that can be withdrawn without notice or penalty if needed.
Thanks for the feedback, max out pensions now is loudest advice, I know we are way behind and then chip away at the mortgage for the next few years. The 35k is net, so I may build up a slightly heavier emergency fund although the plan is both of us remain in FT work but she takes 1.5yrs maternity, all outgoings are kept below one salary so although we may not be saving heavy there's no concern in that period with part of it full pay. I will take a good look at trade Republic. Thanks again all.Your best education fund is to overpay your mortgage. You get a risk-free, tax-free return of the mortgage interest rate.
So it's either contribute more to a pension or pay down the mortgage.
I do like the idea of getting the Loan to Value down to 80%. It gives you a lot more flexibility and lower rates when your fixed rate is up.
So I would probably get it down to 80% now - then stop overpaying it and stuff the pension.
Brendan
TR 4% =Well, you could put the €35k on deposit for a year @4% and earn a grand total of €262 (after tax) more than you would save by simply paying it off the mortgage @2.25%.
Depends what value you place on your time, but I wouldn’t bother jumping through all the hoops of opening another account and filing a tax return just to make €262 - I would simply pay it off the mortgage.
Beyond that, I think you should both prioritise maximising your tax-relieved pension contributions, relevant to your respective ages, over paying down your mortgage ahead of schedule.
Your mortgage balance is already fairly comfortable as a multiple of your joint income and, well, you’re not getting any younger.
If you do find you are building after-tax savings (after maximising your pension contributions), then just throw it at the mortgage until it’s gone.
Keep it simple.
DIRT rate is 33%, not 41%.TR 4% =
35000 * 0.04 = 1400.
Remove DIRT 41% = 826e
Good catch I stand corrected, in that case the final difference I can see is 150.50 eur.DIRT rate is 33%, not 41%.
To be absolutely accurate, the “return” on paying down a mortgage ahead of schedule is the weighted average interest rate over the remaining term of the mortgage.
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