# mortgage or rainy day



## lilymom (23 Mar 2010)

Age:35
Spouse’s/Partner's age: 38

Annual gross income from employment or profession: 
36,000 working 3 days (may finish Dec. 31st 2010)
Annual gross income of spouse: 52,000

Type of employment: e.g. Civil Servant, self-employed 
Both private sector employed

In general are you:
(a) spending more than you earn, or
(b) saving?

Saving

Rough estimate of value of home 350,000
Amount outstanding on your mortgage: 

Mortgage 108,00 Tracker (190 months remaining)

Top Up Mortgage 36,000 (we got this when we were building our house and underestimated cost. variable rate

*What interest rate are you paying? *

Other borrowings – car loans/personal loans etc None

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:

80,000

Do you have a pension scheme? Yes 

Do you own any investment or other property? no

Ages of children: 3 under 8 years of age

Life insurance: yes


*What specific question do you have or what issues are of concern to you?*

*Should I pay off the Top up mortgage which is a variable rate and invest the rest or hold on to the savings for a rainy day*


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## harriet (23 Mar 2010)

Posed this same type question recently to accountant.  His advice (which we have yet to do) was to invest the money in an account with a higher interest rate than the mortgage to which we would have access and to wait until mortgage interest rates went up before deciding to use to pay off the mortgage as we would be still be earning a little bit extra


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## callybags (23 Mar 2010)

> to invest the money in an account with a higher interest rate than the mortgage to which we would have access and to wait until mortgage interest rates went up before deciding to use to pay off the mortgage as we would be still be earning a little bit extra


 
In this situation you need to take into account the DIRT tax you will incur on the interest received.

For example, if the interest rate on your deposit is 3.5% you will only receive 2.625% after DIRT is deducted.


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