I'm old fashioned in my thinking - if you have a debt pay it off.
We took out a 20 year mortgage 5 years ago but kept the payments static so as the interest rates fell, the overall term fell. Also we added the mortgage interest relief on to our repayments.
My logic is to pay it off as efficiently as we can - especially when interest rates are so low - so that we're eating into capital repayments. Then whenever the interest rates do rise - there's less capital upon which its calculated
We now have 13 years left on my mortgage - 180 K. We have a tracker rate of .6 above ECB so an interest rate of 1.6. We pay 1420 per month which is above the required amt by 120 euro
However - here's the thing. we were out at the weekend and I was told I was mad. That we should only pay the minimum at 1.6% and invest the rest at 3.1-3.7% depending. The net gain is more beneficial to you. Get your money working for you.
however when I argued the DIRT argument - that 25% be deducted from a net gain and that as we are eroding the capital sum, so when interest rates do rise, his proposal would have him paying interest at a higher rate on a greater amount.
I need convincing of the economics of his argument.
Any clarification much appreciated
We took out a 20 year mortgage 5 years ago but kept the payments static so as the interest rates fell, the overall term fell. Also we added the mortgage interest relief on to our repayments.
My logic is to pay it off as efficiently as we can - especially when interest rates are so low - so that we're eating into capital repayments. Then whenever the interest rates do rise - there's less capital upon which its calculated
We now have 13 years left on my mortgage - 180 K. We have a tracker rate of .6 above ECB so an interest rate of 1.6. We pay 1420 per month which is above the required amt by 120 euro
However - here's the thing. we were out at the weekend and I was told I was mad. That we should only pay the minimum at 1.6% and invest the rest at 3.1-3.7% depending. The net gain is more beneficial to you. Get your money working for you.
however when I argued the DIRT argument - that 25% be deducted from a net gain and that as we are eroding the capital sum, so when interest rates do rise, his proposal would have him paying interest at a higher rate on a greater amount.
I need convincing of the economics of his argument.
Any clarification much appreciated