SSIA - what to do?

M

manwithaplan

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This is my first post so bear with me. Hopefully I'll become a useful contributor to this site in due course but for now I'm just another parasite looking to feed on your collective wisdom.

Myself and my wife (both 35) have two fully loaded SSIAs maturing in March (one equity, one fixed rate deposit). Say €40,000 for argument's sake. We have two 25 year mortgages, one for €167,000 with 20 years to run and one for €170,000 with 23 years to run. Our house is worth about €950,000. Both mortgages are trackers with AIB on ECB +.95%. We have no other debts.

We have a few small holdings of shares here and there but nothing significant. We earn about €125,000 before tax per annum between us and are reasonably well sorted in pension terms as we are both public servants. We have three young children.

I might skim a few quid off the SSIAs to change the car but have no other immediate requirements for the money. My instinct was to dump the proceeds into one or both of the mortgages and also increase the mortgage repayments by the amount of the current monthly SSIA contributions.

My concern is that it doesn't give us any financial safety net should we need funds at short notice. On the other hand, the mortgages would be paid off before the obvious liabilities (college etc.) arise. I am wondering would I be better advised to run with using the lump sum to reduce the mortgage principal but invest the monthly funds elsewhere.

Thanks in advance and hopefully I'll have something to offer in the future.
 
Can you explain the two mortgages -- is one for an investment property? Are they both secured on your PPR? It might affect what people recommend.

The other (and perhaps more important) thing to consider is what to do with the extra €500 per month in cashflow, that you were previously putting into your SSIAs.
 
The two mortgages both relate to our primary (and only!) residence. We took one out when we bought it - it's not our first house - and one when we extended it.

Sorry - I should have been more clear. Also, the mortgage sums I quote are the amounts of the initial mortgages rather the current principals. We have not made any contributions above the standard repayments, however.
 
What you could do is continue with the equity SSIA by saving the same amount and keep the balance in that fund intact.

Put the Deposit SSIA into the mortgage and use that monthly contribution to escalate payments.

If you need funds urgently you should be able to get a cheque from the equity plan provider in a week to ten days.
 
You could also move your mortgage from AIB to NIB's new LTV mortgage -- your LTV would probably get you a guaranteed ECB+0.5%, and you should be able to pay the whole thing off in 20 years for less than it's costing you now (perhaps 15 years if you redirect one of your SSIA payments towards increased mortgage payments).
 
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