Home owner/investor looking for financial advice.

[toughcookie]

Apologies if this isn't an altogether new thread but just wanted to get some advice on the following situation.
2 mortgages 1 private 1 investment property.
Property 1 bought 2005, tracker, interest rate of 1.75%, 25 year mortgage. 205k left (took out mortgage of 250k). Live in this myself and also have room rented. Mortgage 1200, rent 750.
Property 2, mortgage of 265k (originally 295k), interest rate 1.95%. currently on interest only for 5 yrs (bought is 2006), am currently overpaying on this to reduce the capital, paying 1150, receiving rent of 850. This is due to go to repayments in Dec 2011, I have no idea how much they will be. Want to pay a couple of k of mortage to continue to try to reduce term and unsure whether to pay off private home or investment property or does it make much difference??. Have about 12k savings but want to buy a car (max 5k), should i use more savings to pay off mortgage or should I hold on to savings?
I have a stable job and a gross oncome of approx 50k. longterm dont want to live in current home so am continuing my savings but end up putting a few k of mortgages every year.
Appreciate any advice/suggestions.

 

[Guitarist]

Cash is king - keep the money. Aside from liquidity (and that is the most important issue at a time when it's hard to borrow) you'll probably get as good a return by putting it on deposit as paying off your loans

 

[Greta]

Keep your savings, 12K-5K car=7K which isn't much. In fact, it's very little, considering that you have 2 houses to look after.
It is generally advised to have a minimum of 3 months' living expenses saved as an emergency fund, but it would be better to have more, 6 months' or even more. I'd also add at least 5K to that to provide for unforeseen expenses for the investment property. Build up at least that much in savings before considering using anything else to overpay your mortgages.

Also find out (use an online calculator) how much your payments on the investment mortgage will be once interest-only period ends, so you can budget for the increased payments.

 

[horusd]

Agree with other posters OP. Pointless paying off a tracker @1.95% when you can get more on demand deposit - see "best buys" on AAM. You need 2 establish likely repayments on property 2 Dec 2011 so you can budget.Can bank forecast this for you? Karl's mortgage calculator might also be useful to you. See link http://www.drcalculator.com/mortgage/

€7k nett savings is VERY low given your potential exposure to any problems that might arise. ie renters moving out, other unexpected outlays, etc. 6 months salary seems prudent. Do you need 2 buy a car now? You might also benefit from a budget planner. Here's one I use downloaded from AAM recently. http://www.askaboutmoney.com/showthread.php?t=145557.