# what to repay



## Mitsubishi (9 Sep 2014)

Age: 54
Spouse’s/Partner's age: 48

Annual gross income from employment or profession: 32k
Annual gross income of spouse:8k

Monthly take-home pay 2500

Type of employment: Private co 
In general are you:
(a) spending more than you earn, or


Rough estimate of value of home 125k
Amount outstanding on your mortgage: 114k
*What interest rate are you paying? .9 %*

Other borrowings – car loans/personal loans etc credit union = 35 k

Do you pay off your full credit card balance each month? 
If not, what is the balance on your credit card?  no cc

Savings and investments:none

Do you have a pension scheme? I have bond 15k 

Do you own any investment or other property? no 

Ages of children: 22,19 both students

Life insurance: yes 

I won 40k what shouild I do pay credit union or part mortgage ?


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## Mitsubishi (9 Sep 2014)

16 years left on mortgage( i re-motgaged once) paying 550/month to motgage 400/month to credit union


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## Janet (9 Sep 2014)

What's the interest rate on the credit union loan? Assuming it's a lot higher than the interest rate on your mortgage isn't the sensible thing to do to pay off the credit union loan? I think I would then keep the remaining 5k as savings/investment, something easily enough accessed for emergencies but not so easily accessed that you will be tempted to fritter it away. That way your only debt is the mortgage and, if you have the spare, you can start making extra payments on your mortgage. 

You don't give any figures on your spending though and since you mention that you're spending more than you earn in general, that's something you really need to look at. No point in paying off the credit union loan if you end up in debt again next year. You might find it useful to outline your outgoings in more detail, people will always have suggestions for ways to cut out the excess. Either way your 40k will be gone very quickly as you're allocating it to debt. So the really important thing, if you haven't already done so, is to focus on how the debt arose in the first place and get that under control.


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## Brendan Burgess (9 Sep 2014)

Agree with Janet about trying to live within your means.

But you must pay off the credit union as the effective interest rate could easily be 20% a year if you have shares against your loan. 

You could consider contributing the €5k to a pension scheme if putting it out of reach for a few years would help you to save it. 

Having said that, if you end up borrowing again from the Credit Union, then it might not be a good idea. 

Brendan


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## Mitsubishi (10 Sep 2014)

But because mortgage term is longer 16 years won't I pay more intrest ?  credit union term is 9 years. ALso tracker rate on motgage is low now but this might not last. agree with living within means thanks


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## Brendan Burgess (10 Sep 2014)

No. You must judge everything on an annual basis. 

The terms of the loans are simply not relevant.



 Mortgage loan|114k @1%= €1,000 interest 
Credit Union loan|35K@10%= €3,500
Total|€149k| €4,500
By paying off the Credit Union, you save €3,500 a year in interest.

If you pay off your mortgage, the result will be 



 Mortgage loan|80k@1%= €800 interest 
Credit Union loan|35K@10%= €3,500
Total|€115k| €4,500
You owe the same amount, you just are paying far more interest.


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## Mitsubishi (10 Sep 2014)

Mitsubishi said:


> 16 years left on mortgage( i re-motgaged once) paying 550/month to motgage 400/month to credit union


 

its 650/m to mortgage


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## Brendan Burgess (10 Sep 2014)

Hi Mitsubishi

The repayment is not relevant. The only relevant issue is the interest you are being charged.  The rest of the repayment is capital, which is reducing the mortgage balance.

Brendan


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## Mitsubishi (10 Sep 2014)

Brendan Burgess said:


> Hi Mitsubishi
> 
> The repayment is not relevant. The only relevant issue is the interest you are being charged. The rest of the repayment is capital, which is reducing the mortgage balance.
> 
> Brendan


 
thanks


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## Gerry Canning (10 Sep 2014)

Mitsubishi; Welcome to AAM.

Agree with Brendan/janet, repay higher interest loan CU now.

You then have a (free) 400 per month.
That 400 should sort your spending more than you earn issue.

You obviously have good credit rating , so in future do not be tempted to re-borrow.I see you remortgaged once but your mortgage is at very low % rate .Looks like % will stay low for long nuff .
You are now in a good place , so stay there!


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