Should I use a lumpsum to pay off my investment mortgage?
- Thread starter lemrac
- Start date
Brendan Burgess
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Hi lemrac
I have moved this from the thread on the euro. It deserves a long key post along the lines of the one on home loans.
Just some quick points. I might return to this later, but I would be delighted if someone else would write a Key Post.
1) The safest place for any deposits you have is to pay off your loans.
2) You should pay off the loan with the highest net cost of interest after tax relief. As you get better tax relief on an investment property, it's likely that you should pay off your home loan first. But do the numbers.
3) You may well get an incentive from the bank to pay a lump sum off an investment mortgage, especially if you have a cheap tracker. So check it out.
4) If you have a very cheap tracker, you can get a much higher rate on your deposits, but there is a risk to your deposits.
5) If Ireland leaves the euro, your mortgage in Irish euro may be devalued, while a deposit in German euro may be revalued.
5A) The opposite is possible. The Irish euro could rise against the German euro.
I have moved this from the thread on the euro. It deserves a long key post along the lines of the one on home loans.
Just some quick points. I might return to this later, but I would be delighted if someone else would write a Key Post.
1) The safest place for any deposits you have is to pay off your loans.
2) You should pay off the loan with the highest net cost of interest after tax relief. As you get better tax relief on an investment property, it's likely that you should pay off your home loan first. But do the numbers.
3) You may well get an incentive from the bank to pay a lump sum off an investment mortgage, especially if you have a cheap tracker. So check it out.
4) If you have a very cheap tracker, you can get a much higher rate on your deposits, but there is a risk to your deposits.
5) If Ireland leaves the euro, your mortgage in Irish euro may be devalued, while a deposit in German euro may be revalued.
5A) The opposite is possible. The Irish euro could rise against the German euro.
Tried that!
I tried to approach AIB with a view to paying off a €130k tracker at 1.8%. They did not want to know! They would not even consider anything at all. They just issued me with a breakdown of the amount due and the expected interest. I discussed this with the AIB rep and she agreed that it is crazy economics but deposits I have with AIB are earning more than what I am paying them in interest!
I tried to approach AIB with a view to paying off a €130k tracker at 1.8%. They did not want to know! They would not even consider anything at all. They just issued me with a breakdown of the amount due and the expected interest. I discussed this with the AIB rep and she agreed that it is crazy economics but deposits I have with AIB are earning more than what I am paying them in interest!