Which mortgage to pay off?

[dingdong]

Hi

I have question regarding payment of mortgage.

I have my home in Dublin - interest only mortgage with BOS - 550,000 @ 4.9 % - approx 2200 per month value 1000000 euro

Also investment property in belfast - mortgage 120,000 stg rent 550 stg per month - Repayment mortgage 800 per month - Int rate -5.6% -2 yr fixed. value 200,000 stg

I have 20,000 euros, which one should i pay the 20,000 towards. I can afford the shortfall on the investment and currently ok on interest only on home.

What is best tax wise etc....

 

[LDFerguson]

I'm not a tax professional but it would seem to me that it would be better to pay off the home-loan rather than the investment property. Even if you're getting First Time Buyer tax relief on your home as a married couple, the ceiling for interest is €16,000. If you're not married or not a first time buyer, the ceiling is lower. You're paying BoS nearly €27,000 a year in interest so you're well above the ceiling. Reducing this loan by €20,000 will bring your annual interest down by around €1,000 per year so still well above the ceiling, therefore paying it off this loan won't affect your tax relief at all.

Anyway, in general the tax write-off against rent is more valuable than residential relief.