Clearing Mortgage

D

dino

Registered User
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Hi,
I moved house earlier in the year and took out a new mortgage (€380k with 1 year fixed until next January). I have just gone sale agreed my old house (PPR) and I have also sold a rental property. There is a mortgage on my old PPR which will be cleared and no mortgage on the rental property and no capital gains due.
Once the sale of my old PPR closes I will be in a very lucky position to be able to clear the mortgage on my new PPR.
Originally I fixed for 1 year at 2.6% with Bank of Ireland to give me time to sell the other properties.
If I have the funds to clear the mortgage in July or August should I do this? Or should I wait until January?
Has anyone got out of a fixed rate with BOI? Are the breakage fees reasonable?
 
Breakage will be reasonable if there's 4-5 months left on the mortgage. Right BoI when you're able to pay the mortgage off and ask for a breakage fee. You'll know if it's worth it then
 
dino said:
If I have the funds to clear the mortgage
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Impossible to tell without more comprehensive information about your overall personal and financial circumstances. E.g. do you have any other higher cost debts that should be tackled first? Do you need to boost your pension investments first? Are there other short/medium term demands on your money that should take priority over repaying a low cost mortgage loan?
 
No other debts. Good semi state income and DB Pension. Planning to either buy Notional Service or start AVC's after the mortgage is cleared.
 
dino said:
If I have the funds to clear the mortgage in July or August should I do this? Or should I wait until January?
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You should almost certainly clear it as soon as possible.

It is unlikely that the break fee, if any, will exceed the interest charged on the remaining period of the fixed term.

But get the break fee. Then multiply the balance by the interest rate to work out how much interest will be charged.

Paying off the mortgage is likely the best use of your money, but it would be no harm, as Paul suggested, to do an overall review of your finances.

Brendan
 
dino said:
Hi,
I moved house earlier in the year and took out a new mortgage (€380k with 1 year fixed until next January). I have just gone sale agreed my old house (PPR) and I have also sold a rental property. There is a mortgage on my old PPR which will be cleared and no mortgage on the rental property and no capital gains due.
Once the sale of my old PPR closes I will be in a very lucky position to be able to clear the mortgage on my new PPR.
Originally I fixed for 1 year at 2.6% with Bank of Ireland to give me time to sell the other properties.
If I have the funds to clear the mortgage in July or August should I do this? Or should I wait until January?
Has anyone got out of a fixed rate with BOI? Are the breakage fees reasonable?
Click to expand...
You will have capital gains on the rental as its sold without a mortgage, unless you can show the figures of what you paid for it and sold it for.

I think you might be dancing over a few details here, but if you have the money and all relevant taxes paid any break in contract would be minimal in the greater scheme of things.
 
The OP states no CGT due on rental property.

Any mortgage is not relevant to CGT.
 
I previously sold another rental property at a €100k loss from what I paid for it at the height of the boom. I sold this first so that I could carry forward the loss to the sale of the second property. All good advice I read on AAM.
 
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