How to spend the reduced mortgage payments wisely?

[McGinty]

Not sure if this is the right forum but I'll ask anyway.



I currently have 2 mortgages:

• €260,000 tracker variable mortgage (28yrs) on my primary residence
• €260,000 tracker interest only mortgage (17yrs) on an investment property

As the mortgage payments on the investment property have dropped by €500 a month (approx) since this time last year, I am looking to spend this extra "money" as wisely as possible. Can you offer any advice/experience on which of the following options might be the best?

1. Start to pay the extra €500 a month off the primary residence mortgage to reduce the number of years left.
2. Start to pay the extra €500 a month off the investment property. Although this will reduce the monthly payment slightly, it does mean that I'll be paying more to the taxmen from the rental income. However, If I don't start to do something about this mortgage now, I'll still owe that €260,000 in 17yrs. Unfortunately, I am not in a position to switch to any other type of mortgage yet, so am stuck at interest only.
3. Start to stick the money in a savings account.

Feel free to offer an alternative.

Thanks in advance.

McGinty

 

[Galwayboy]

Stick the money in a regular monthly savings account. Anglo are currently paying 7.3% next best is BOI at around 4.75%. Your tracker mortgage is probadly around 1.25% over ECB so the interest is likely to be 2.5% currently. So its a case of do you want 7.3% (less 1/4 in dirt) or 2.5% (less probadly 1/2 of 2.5% in additional tax on the rental income). Down the line you can use the lump sum saved to either pay of some of the mortgage or as a rainy day fund and believe me there are a few wet days ahead (for everone).