Pay off investment property mortgage?

M

Midtown

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Looking for some opinions.
Home is mortgage free, mortgage on investment property is covered by rental income. Amount outstanding is 260k. Property value is approx 450k, rental income of 24k per year.
Do folks recommend paying off the investment property mortgage (rate approx 3%).
Assuming no plan to sell the property in the near future is the trade off interest paid v tax on rental income?
Thanks
 
If you paid off the mortgage you would make a guaranteed 3% (you need the exact figure) after tax return.

Thats not bad, though it is less than inflation, so not great really.

The important question is, what else might you do with the money?
 
cremeegg said:
If you paid off the mortgage you would make a guaranteed 3% (you need the exact figure) after tax return.

Thats not bad, though it is less than inflation, so not great really.

The important question is, what else might you do with the money?
Click to expand...
Thanks, yes I have some ideas for other investments. Nothing without risk though.
 
the interest rate is effective 1.5% not 3.0% as you can write off the interest payments against tax. Assuming you are a higher rate of tax payer, this is the case. So can you find an alternative investment for your €260,000 that will give you a guaranteed return of 1.5% nett?
 
PebbleBeach2020 said:
the interest rate is effective 1.5% not 3.0% as you can write off the interest payments against tax. Assuming you are a higher rate of tax payer, this is the case. So can you find an alternative investment for your €260,000 that will give you a guaranteed return of 1.5% nett?
Click to expand...
Nope, the only ideas I have involve risk taking to some extent.
 
These questions cannot be answered in isolation.

I suggest you do a moneymakeover

Money makeover

Budgeting and dealing with debt moved to Mortgage Arrears and Debt Forum .
www.askaboutmoney.com

For example, if you have scope to contribute to a pension that would be a higher priority than clearing a mortgage costing you 1.5%

Brendan
 
Ah, I see you have already done one.

Investing for passive income

Maybe this is better off in the investments forum, or shooting the breeze. Inspired by the other thread on this subject but to a far smaller scale I wanted to pose a question. If someone is fed up of corporate world and has decided on a complete lifestyle change and had a lump sum of 300k to...
www.askaboutmoney.com
 
Brendan Burgess said:
Ah, I see you have already done one.

Investing for passive income

Maybe this is better off in the investments forum, or shooting the breeze. Inspired by the other thread on this subject but to a far smaller scale I wanted to pose a question. If someone is fed up of corporate world and has decided on a complete lifestyle change and had a lump sum of 300k to...
www.askaboutmoney.com
Click to expand...
Brendan Burgess said:
Ah, I see you have already done one.

Investing for passive income

Maybe this is better off in the investments forum, or shooting the breeze. Inspired by the other thread on this subject but to a far smaller scale I wanted to pose a question. If someone is fed up of corporate world and has decided on a complete lifestyle change and had a lump sum of 300k to...
www.askaboutmoney.com
Click to expand...

Yep, thanks Brendan. The pensions are maxed already, since that makeover post a few things have changed. We have moved home and salaries are similar, maybe a bit higher. Paid off the home mortgage this summer too.
 
Probably do a fresh one so.

But overall, you are in a very comfortable financial position.
Your main objective is wealth preservation rather than wealth maximisation.
That would argue for clearing the mortgage to reduce risk.

Brendan
 
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