Moneymakeover Pay off tracker mortgage now or in August 2027

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Haille

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I have a tracker interest only mortgage taken out in August 2007 [ 120,000 euros] and in October 2007 [20,000] The current rate of interest is 2.9%My monthly payments are 338 euros. It is an ivestment property which I have rented out since 2007. As it is a rented property I get tax relief on the interest payments. My question is should I pay off the mortgage now? I have funds to pay it off. If I leave the funds in savings am I at a loss.? The fact that I get tax relief on the interest paid, I am trying to gauge how much of a loss this would be if I pay off mortgage now.
 
What is the balance left today?

I am guessing it's about €20k
You will pay about €420 interest this year and €150 next year.

So it doesn't matter that much. I would probably pay it off and simplify my affairs.

The correct technical answer is :
Rate of interest saved by paying it off : 1.74% (2.9% - 40% tax relief)
Can you get 1.74% after tax on a safe deposit? I don't know, but it would make almost no difference.
 
I am assuming you do not have a mortgage on your home?

If you do, and the interest rate is > 1.74%, then you should pay off your home loan first.
 
And if you have any other higher cost unsecured loans or credit card balance then these should be tackled first. That's why filling out the full Money Makeover template is useful - so that people have full context in which to offer feedback.
 
Many thanks.I still have 140,000 euros balance left as it is a remortgage of my main family home and it was an interest only mortgage.
 
So this bit applies

The correct technical answer is :
Rate of interest saved by paying it off : 1.74% (2.9% - 40% tax relief)
Can you get 1.74% after tax on a safe deposit? I don't know, but it would make almost no difference.

If you had ten years left , it might make sense to hold onto the cash in case you needed it for something else. But as you will need it anyway in two years, I would think that paying it off is correct. It's definitely not much wrong.
 
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