Invest or pay off tracker mortgage

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Newmoney

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I have recently taken a redundancy package of 200 000 euro. I have another job so I am wondering should I invest the lump sum or pay the money off my 300k tracker mortgage which is ecb plus 0.75%. What would be the best return if I invest the lump sum over a 5 year period?
 
Hi Newmoney

Assuming:-

1. The mortgage is on your PPR;
2. You don't want to take on any significant additional investment risk; and
3. You have sufficient cash reserves available to meet your anticipated expenses together with a reasonable cash buffer to address any emergencies that might arise;

your decision really comes down to whether you could get a better rate of interest (less DIRT and PRSI, if applicable) on an instant access deposit account than the rate you are currently paying on your mortgage (less any available mortgage interest relief).

Deposit rates have fallen to such a low level (and DIRT is levied at such a high rate) that, all other things being equal, it now invariably makes financial sense, at least mathematically, to pay down a tracker ahead of schedule.

Having said all that, you have such an exceptionally low mortgage rate that it probably won't make a lot of difference financially whether you decide to keep your redundancy money on deposit or pay down your mortgage. If it was me, I'd probably split the difference.
 
Agree with sarenco.

Only point I would add is whether it makes sense to up your AVC pension contribution if that's an option or possible in your new job. Get tax deduction and a way to boost your pension while you have an option with cash available.
 
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