This is a tough one.
In pure financial terms, yes, you should pay off the mortgage immediately. You will be getting the equivalent of 4.8% guaranteed tax-free return on your savings. So you will save €2,200 a year in interest.
Your repayments are about €5,000 a year, so you won't have to make them.
The problem is that you may well find it difficult to borrow to fund the extension in a few years. I don't think any banks are giving out loans on mortgage-free houses now. They should be.
It might be easier to get a top-up if you have an existing mortgage.
I suggest that you pay off €40,000 and leave the term the same. So in a couple of years you will still owe most of the €6,000. It just might be easier to get the finance from ptsb. €6,000@5% is €300 a year in interest. Well worth paying if it increases your chance of getting a loan.
Brendan