We have 25k do we just pay off mortgage given the unstable markets forecast

MissMoneyPenny2

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Hi
We have 25K to spend, we were going to invest it but given the future of the economy with the coronavirus we have decided to lump sum, pay off our mortgage.

I think we should save money in the long term and what we save will be the reward in the end.
We have no car loans or personal loans no debt...
just the mortgage with 9.5 years left around 86k At 2.3%
We are currently overpaying the mortgage to have it paid quicker monthly which is 900 we are adding 500 to make make 1400 monthly
It looks like we should be able to reduce it down to just under 4 years with the lumpsum and the continuous overpayment
My husband is full time employed aged 42 with a salery of around €83K I’m a stay at home mum 40 With one child 7.
we were considering buying again it would leave us free
Any suggestions welcome
 
Yes, certainly pay off your mortgage before investing.

You are earning a return of 2.3% risk-free and tax-free.

The only alternative would be to contribute to a pension.



Brendan
 
Yeah thanks for your reply .... currently contributing into a pension 15% of income €83k he has 76K saved so far In pension to date
 
With mortgage below one years salary, I'd be maxing out my pension relief.

Markets are expensive, but you are buying at half price (due to tax relief) and they may never become significantly cheaper again. If they do become cheaper even better a chance for you to buy more.
 
Consider the fact that mortgage is only @ 2.3% and 9 years left, whereas investing in a Risk3/4 rated fund for over a period of 9.5 years will easily make more than the mortgage. As markets perform well in the long run, you do not have to invest 25K in a go, you can invest 20-20% when the market goes down. However, the Best Idea would be maxing out the pension. (40%) tax relief, nothing beats that.
 
This money was from shares and there has been a significant amount of tax paid on them...already... should it of been something that was done before we paid the tax to put the money into a pension.
 
No, share based pay is taxable so you haven’t missed the boat.

I think that you guys should prioritise the pension and maximise your husband’s AVCs.

So top up to 25% for last year and start doing it through payroll for this year.

If that means saving less or not overpaying on the mortgage, so be it.
 
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