pay off some of mortgage

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xbx360

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Hi in a month or two my wife and I will be getting a gift of 100,000 euros, question is to pay off half our mortgage (195,000) tracker over 30 yrs or invest it somewhere pension or property. I will be getting some professional advice when this happens, but would be interested in what this forum has to say.

Thanks in advance
 
xbx360 said:
Hi in a month or two my wife and I will be getting a gift of 100,000 euros, question is to pay off half our mortgage (195,000) tracker over 30 yrs or invest it somewhere pension or property. I will be getting some professional advice when this happens, but would be interested in what this forum has to say.

Thanks in advance
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I'd suggest it'd down to your own personal view. Each of the options you've suggested are very different to each other with seriously different risks associated.

Mortgage: The safest bet. You can look at the savings associated with this by inputting the figures into a Mortgage Calculator.

Big savings to be made given the current ECB rate at 3%, then also consider if you go along with current sentiment that further ECB rises will push rates to 4%, 5% and even higher with time.

Provides the knowledge that the money has been invested wisely and is saving you money all the time. You have a large equity in your home should you ever need money in an "emergency" and you've a larger amount of disposable income from month to month.

Pension: You're tying the money up for good. You'll have no access to it until you reach retirement. It will give you the security of knowing you have a (larger) nest egg when you retire, but, IMHO, you're sacrificing enjoying the benefits of some of the money now (higher disposable income available from paying off mortgage - you can cut payments and still take as much from the capital amount as the interest charges will be far lower). Depends on how much you worry about being able to afford your retirement, but a few too many things to put me off that one.

Property: This, more than any other, comes down to personal opinion. Are you a bear or a bull? Given all the talk of market crashes/bubbles/corrections do you feel property is where you want your investment? It has the most risks attached, but also potentially the greatest rewards. You've already got one property (/home), do you think it wiser to keep all your assets in property rather than diversifying.

Personally, I'd feel it's too much trouble for all the risks that go with it. You've all the hassle of finding/buying the property, doing it up, finding tenants (all the legal aspects of this - tax returns, register PRTB etc.)... without any guaranteed return. Factor in the possibility of a market correction, changes in CGT etc., unrented periods for an investment property...... I'd prefer the guaranteed savings of the mortgage payment.

Again, no option is the "right one". It depends on what you want from your investment.
 
One possibility here is to open a "current account" mortgage. First Active advertise this product. You can lodge funds into a separate current account which is offset against your mortgage for interest purposes. The beauty of this is that the funds are readily available if you ever require them ar at any time wish to invest elsewhere.

I'm not sure how many of the mortgage providers offer this service.
 
Satanta said:
I'd suggest it'd down to your own personal view. Each of the options you've suggested are very different to each other with seriously different risks associated.

Mortgage: The safest bet. You can look at the savings associated with this by inputting the figures into a Mortgage Calculator.

Big savings to be made given the current ECB rate at 3%, then also consider if you go along with current sentiment that further ECB rises will push rates to 4%, 5% and even higher with time.

Provides the knowledge that the money has been invested wisely and is saving you money all the time. You have a large equity in your home should you ever need money in an "emergency" and you've a larger amount of disposable income from month to month.

Pension: You're tying the money up for good. You'll have no access to it until you reach retirement. It will give you the security of knowing you have a (larger) nest egg when you retire, but, IMHO, you're sacrificing enjoying the benefits of some of the money now (higher disposable income available from paying off mortgage - you can cut payments and still take as much from the capital amount as the interest charges will be far lower). Depends on how much you worry about being able to afford your retirement, but a few too many things to put me off that one.

Property: This, more than any other, comes down to personal opinion. Are you a bear or a bull? Given all the talk of market crashes/bubbles/corrections do you feel property is where you want your investment? It has the most risks attached, but also potentially the greatest rewards. You've already got one property (/home), do you think it wiser to keep all your assets in property rather than diversifying.

Personally, I'd feel it's too much trouble for all the risks that go with it. You've all the hassle of finding/buying the property, doing it up, finding tenants (all the legal aspects of this - tax returns, register PRTB etc.)... without any guaranteed return. Factor in the possibility of a market correction, changes in CGT etc., unrented periods for an investment property...... I'd prefer the guaranteed savings of the mortgage payment.

Again, no option is the "right one". It depends on what you want from your investment.
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Thanks for the input kinda leaning towards halfing the mortgage at this point.
 
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