# Construction job gone, pay off mortgage?



## hardhat (23 Sep 2008)

Age: 40
Spouse’s/Partner's age: 36

Annual gross income from employment or profession: was €60,000
Annual gross income of spouse:40,000

Type of employment: e.g. unemployed construction worker

In general are you spending more than you earn or are you saving? break even

Rough estimate of value of home €325
Amount outstanding on your mortgage: €60
*What interest rate are you paying? 5%*

Other borrowings – car loans/personal loans etc NO

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? 

Savings and investments: €95 in different accounts all instant access

Do you have a pension scheme? had frozen, wife small pension

Do you own any investment or other property? No

Ages of children: 1 - 1yr

Life insurance: yes tied to morguage


*What specific question do you have or what issues are of concern to you?*  Earned well with construction, bonus etc, but stopped altogether now.  Should I pay off mortgage? Invest rest of savings or top up pension.  Hope to go back to work but retire at 50, wife wants to go part time. Is this possible?


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## TheBlock (23 Sep 2008)

hardhat said:


> Age: 40
> 
> Hope to go back to work but retire at 50, wife wants to go part time. Is this possible?


 
You'd want to have some pension built up to retire in 10 years time.


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## susie1 (23 Sep 2008)

you owe 60,000 on the mortgage and you have 95,000 in savings - is this correct? if so, i would clear the mortgage, check you are not on a fixed rate or the would probably be penalties.


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## Brendan Burgess (23 Sep 2008)

If you are paying 5% on your mortgage and earning 4% less DIRT on your savings, then you should pay off your mortgage.

Some might be prepared to take the risk of investing the money in the stockmarket, and hope to get a return in excess of 5%. However, you are not really in a position to take this risk.

So do pay off the mortgage.

Don't contribute to a pension scheme until you are back in the top tax bracket again


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## hardhat (24 Sep 2008)

Thanks all, no penalties on mortgage so looks like way to go, just seams like a lot to hand over in one go, but prob best in long run.
Currently paying €1,800 pm as overpaying to decrease term, it is a lot to gather when things this quiet. Would only have €35 left in savings then, best plact for that?


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## Bronte (24 Sep 2008)

If you reverted to paying your mortgage as normal with no overpayments and you got a high rate of interest for your 95 K it might be better to keep the 95K.  This is because you have a relatively low mortgage and there is some interest relief on it (TRS) so it doesn't actually cost you 5%.  Can your family live on a 40K income with some interest on the 95K plus paying the mortgage.  What would you do if your wife lost her job.  How long would the 95 K last then, long enough for you to get back into work etc.  These are just some of the questions you need to be looking at.


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## ClubMan (24 Sep 2008)

hardhat said:


> Would only have €35 left in savings then, best plact for that?


You mean €35K if you clear the mortgage? In terms of deposits see the _Financial Best Buy_s forum and www.itsyourmoney.ie lists of the best deposit accounts on offer and the many existing threads on how to mix and match multiple accounts to maximise deposit interest returns.


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## ClubMan (24 Sep 2008)

Bronte said:


> If you reverted to paying your mortgage as normal with no overpayments and you got a high rate of interest for your 95 K it might be better to keep the 95K.  This is because you have a relatively low mortgage and there is some interest relief on it (TRS) so it doesn't actually cost you 5%


Yes - *"IF"*. But in all likelyhood net deposit interest returns will still be less than the net cost of the mortgage (don't forget to factor in mortgage protection life assurance premiums as an ancillary cost of the mortgage). Crunch the numbers but in all likelyhood it may not make sense to maintain savings while carrying such a debt.


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## niceoneted (26 Sep 2008)

At the moment I would suggest your wife stay on in full time employment and you mind the little one - cuts out on child minding fees. 
I would hold on to the mortgage but switch it to a tracker with a good LTV like yours you should even get it on slightly cheaper, NIB do a Ecb +.5 percent on less than 50% LTV -which you have. Maybe even pay off 10k so have one for 50k.
You should be able to manage on your wifes income. If you can cook you should be cooking meals form scratch as it is cheaper and if you don't know how now is a good opportunity to learn a new skill. 
I would hold off on increasing the pension payments for the moment until you see how you manage but ensure your savings are in as high an interest account as possible. 
Best of luck.


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## Flax (30 Sep 2008)

Personally I would pay off the mortgage as the idea of being debt free is very appealing to me.

Also, as Brendan said, if you're paying more interest on your mortgage than your deposits are earning, it makes financial sense to get rid of the mortgage.

The 35k remaining is enough money to keep you going while you (just a suggestion!) gather some skills or education in a non-construction topic.


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## Satanta (30 Sep 2008)

Brendan said:


> Don't contribute to a pension scheme until you are back in the top tax bracket again


... or until you find yourself in a position to avail of employer contributions.
(you'd have to crunch the numbers depending on the specifics of the scheme to see if this one stacks up for you)


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## NHG (30 Sep 2008)

I would pay off the mortgage (which we did ourselves with the ssia) and we then set up a regular savings account for what your mortgage repayment was each month, otherwise the extra few bob in your pocket will just flitter away.  Don't worry about the pension until you are in the high tax bracket again.


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