Pay off Property?

T

Tommy23

Guest
Hi,

I have an investment property since last year, price 330000, mortgage 265000 over 35 years. AIB tracker 3.4% over 35 years - 1080 euro pm.

The current rent is 1050 pm.

I have/will have 40000-60000 euro over the coming year. Should I use the money to reduce the loan term or invest somewhere else. (I have no home mortgage) Using Karls mortgage calculator if i pay off a 40000 lump sum the average mortgage interest paid over the next 9 years falls from 8370 euro to 7030 (at 3.4%). This would reduce the term to 26 years however i will have more tax to pay.

However, i am expecting interest rates to go up to at least 4% over the next year or so. so my monthly payments should rise from 1080 to 1180 euro pm. so the rent is not covering the mortgage. I could fund the difference. should I be doing so, i.e. plowing all of my extra cash into repaying the mortgage more quickly or investing in shares or something? I will have 250 euro per month extra when the ssias are finished. and get an 8000 lump sum every year in addition that i could use.

thanks
 
You will receive tax deduction for the interest on the borrowings on the investment property, as you stated
But if you pay off the loan and then decide to invest in something else by releasing equity you might not be able to claim the interest on the new loan as a tax deduction
If you are unsure a long term investment strategy I would make up any shortfall for the time being until you can make a more ceratin decision

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