1) You should not borrow to invest in shares which is what you are doing when you buy shares while you have a mortgage.
2) If you have liquid shares, you do not need an emergency fund, as you can sell the shares quickly if you need the money.
3) If you sell the shares, you have the emergency fund sitting in cash.
4) Usually I would say clear the mortgage with the cash first.
5) But as the CGT loss is useful to you and might not be useful to you in the future, I would use it now.
So sell the shares in full and pay down the mortgage.
Brendan
By following this logic you completely limit your potential returns......a balanced approach should be considered.1) You should not borrow to invest in shares which is what you are doing when you buy shares while you have a mortgage.
By following this logic you completely limit your potential returns.
Hi Dublinbay
Yes, you limit your returns. But you also limit your risk so it's a very balanced approach.
Brendan
There is a benefit to gaining exposure to the stock market whilst having a mortgage,
This isn't correct Brendan. Borrowing money to invest in the stock market is getting a loan for the specific purpose of investing in the markets. This is not what they have done. They have borrowed with the specific purpose of purchasing a home, of which the loan is secured against.1) You should not borrow to invest in shares which is what you are doing when you buy shares while you have a mortgage.
This isn't correct Brendan.
If there is a big tax incentive to borrow to invest in the stockmarket, then it is usually right to so. So borrowing to invest in a pension is often right.
Think about it like this.
Say you own a house worth €600k with a €400k mortgage.
Would you ask the bank for another €100k so you could buy shares?
Brendan
It depends on your income of course in the circumstances. With a €200k household income you can afford to take risks. With an €80k household income it would be pretty silly.I would then assess my own personal situation and opportunities vs risk. I would not simply pay off the mortgage by default, and that should not be the default advice given to people.
They're not mutually exclusive Brendan.
I would assess my options to continue to service the debt which I assume I can given I met the criteria to get the mortgage. I would then assess my own personal situation and opportunities vs risk. I would not simply pay off the mortgage by default, and that should not be the default advice given to people.
It depends on your income of course in the circumstances. With a €200k household income you can afford to take risks. With an €80k household income it would be pretty silly.
Once you are maximising tax-relieved pension contributions the default thing to do for most people with a lump sum is to pay down mortgage. There are lots of reasons to do otherwise but this should really be your starting point.
True.There is potential for a balanced evolving personal finance management strategy that can be followed.
The opportunity cost of returns in riskier asset classes should not be discounted until only after you have paid down your mortgage. There is potential for a balanced evolving personal finance management strategy that can be followed.
This is not remotely close to a balanced approach. The OP has a massive exposure to high risk assets and high risk asset classes and he should do all he can to reduce that exposure ASAP.By following this logic you completely limit your potential returns......a balanced approach should be considered.
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