What are your annual expenses like after mortgage? You should keep 6 months or so on deposit in a rainy day fund. Of course you should ask the questions around how stable is your job/industry? What happened in the last downtime (salary wise/jobs wise) etc. How transferable are your skills etcI currently owe 92k on a variable rate of 3.7%. I have 14 yrs left but over pay by ~700 each month.
I have 111k in various deposit accounts ranging from 0.1%-1%.
Correct - and obviously pointing out it is also 26k after tax as well - so you probably have to earn 50k to pay it !I only see 92k and not the 92k + the interest which for me is ~an extra 26k according to DrCalculator.
If you can get by on 22k a year, having 111k on deposit while paying 3.7% on the mortgage is definitely not good financial sense. This roughly 5 years expenses sitting on depositExpenses are relatively low to be honest - I reckon we could get by on 20k-22k per year at the moment.
Might be worth looking at how that can be addressed in the medium term and if you need to keep a reserve in place to allow reskilling (i.e. number of courses etc)Not too sure about skills as I'm a bit pigeon holed but could lie and make it look good
This is why I specifically asked about the cost of living an the security of the job. However, if there are general other concerns such as car needing replacement etc, then this should be factored into it. But yes, if you take a conservative view, then keep it on deposit and pay 3.7% on the basis you may need the funds in the future for some unplanned event.If you needed an overdraft of 50k how much would you pay in interest ? A lot more than 3.7%. Paying off now may leave you vulnerable in a few years.
I'd go half-way and pay off 50k off the mortgage. Then I would see if I can save that 20k you mention. If you do then pay that off next year. If you needed an overdraft of 50k how much would you pay in interest ? A lot more than 3.7%. Paying off now may leave you vulnerable in a few years. Just my tuppence ...
Correct - and obviously pointing out it is also 26k after tax as well - so you probably have to earn 50k to pay it !
If you can get by on 22k a year, having 111k on deposit while paying 3.7% on the mortgage is definitely not good financial sense. This roughly 5 years expenses sitting on deposit
Before I make a final recommendation, I should ask the state of your pension fund and how you are fixed, as you can still make a pension payment for 2017 if you are not maxing it out. That may also make sense given other considerations (i.e. mortgage under control)
Might be worth looking at how that can be addressed in the medium term and if you need to keep a reserve in place to allow reskilling (i.e. number of courses etc)
This is why I specifically asked about the cost of living an the security of the job. However, if there are general other concerns such as car needing replacement etc, then this should be factored into it. But yes, if you take a conservative view, then keep it on deposit and pay 3.7% on the basis you may need the funds in the future for some unplanned event.
One final element on this, if you believe for example that we are due a crash sometime soon and properly may drop considerably and this would create an investment opportunity for you, then there is also a case to hold liquid cash. In this case, cash would be king as banks would not lend in such scenarios. However, that kind of advice would be difficult to give without fully understanding your financial situation, your risk profile and your expectations on financial returns.
Exit tax in this country is 41%, and there is no offset for losses made again profits gained. It is an horrendous tax treatment for ETF's in my personal view, as I personally feel low cost ETF's are a much better investment for retail investors than individual shares - especially passive ones which track indices.I have looked into purchasing ETFs but when reading about the tax in this country I backed away. I also looked at purchasing funds through Standard Life and Friends First.
Agreed - and that is a guaranteed 7%And as said by all I would need to be making > 7% a year to be worth it when stacked against repaying the mortgage.
Final comment is timing of the market is a very difficult thing to do, so be careful on any attempts to do this.The market seems to be at a peak now and coupled with the looming Brexit debacle I would be a wee bit reluctant to commit too much until these pan out a bit more + the fees seem a bit high as stated in other threads?
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