galway_blow_in
Registered User
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You own your home mortgage free.
You have a mortgage of €50k on a property which is probably worth around €80k
Your rent covers your full mortgage repayments.
So far, you are doing very well.
You have a joint income of around 65k net - other than your rental income, so that is pretty good for a family of three with no accommodation costs.
You have a car loan of about €30k ? I presume that the car is worth at least that. Seems about ok and easy enough for you to afford.
The investment property mortgage rate seems high for a low loan to value. Could you switch it to a cheaper lender? Could you take out a mortgage on your home to replace the investment property? You might be able to reduce the rate by about 2% which would save you €1,000 a year.
In fact, why not include the car loan in the remortgage and pay off that bit of the loan over the remaining 2.5 years anyway? Check though if there are early repayment penalties on your car loan.
Brendan
You borrowed 50k @ 5+%
You invested 50k in stock market , you
Should of sold your stock and had no borrowings , this to me is terrible money management , your hoping to beat 5*% after tax in fees in stock market it's a gamble.
i also have a four k income from dividends as i have fifty grand in a major oil company which i bought when yield is 8% ( i know this is poor diversification but i cant see this company going bust )
Borrowing @ 5.74% to purchase shares in a single energy stock certainly wouldn't be my idea of "good debt".
It's an expensive, high-risk, leveraged bet - what's "good" about it? The fact that the interest payments may be deductible for income tax purposes doesn't transform the leveraged bet into a sensible decision.
You own your own home mortgage free. You also have a residential investment mortgage free. You have €70k of equity in a commercial investment property. You have a big car loan.
I wouldn't be terribly worried about diversification. It seems to be about 10% of your total assets. If the company went bust tomorrow, and you lost €50k, you would be sore but not wiped out.
What interest rate are you paying on the car loan? Probably around 10%. So you are borrowing at 10% to invest in shares. The dividend yield is 4% net. The company doesn't have to go bust. The stock market may simply revalue it downwards to make this a terrible investment. Sell the oil shares and pay off the car loan assuming that the net interest rate is much higher than the net interest rate on the commercial property.
Brendan
who said anything about borrowing money to buy shares ? , i didnt even know it was possible to do so
You had shares which you could have sold when you borrowed the money, so in effect, you are borrowing money at 6.75% to buy shares.
You should sell them promptly and pay off the Jeep loan at least.
Brendan
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