About to clear home mortgage, €950K IO RIP loan remains

[Brendan Burgess]

It is a reasonable assumption that you will get a return of more than 0.75% after tax.

I think that this is the most likely outcome, but one cannot rule out that what he invests over the next 11 years will actually fall in value.

The beauty of partly paying down the mortgage is that he is eliminating negative equity, which is why I think it's a priority.

It does not of course minimise risk. Flexibility in my opinion is underappreciated.

Fully agree about flexibility. One approach could be to contribute to an investment fund instead of paying down the mortgage but then reviewing it after a few years.

but then again, the problem with that is that if his fund is on target to hit the €950k mark on schedule, a sudden market drop would leave him in great difficulty. Or maybe not great difficulty, but he would have to sell one of the properties which he might not want to do.

So, all in all, I think it's best to reduce the mortgage to 70% LTV and then he can take more risks.

Brendan

 

[NoRegretsCoyote]

I would invest the savings both the lump sum and on going monthly savings. It is a reasonable assumption that you will get a return of more than 0.75% after tax.

By 2032 you will be able to pay off part of the mortgage from savings and then pay the rest

I disagree. Equities can fall in value. So can property. Your mortgage won't unless you pay it down.

So there is no prudent scenario that doesn't involve paying down some of the BTL mortgages.

You in no way want to be hitting 2032 with a 950k repayment and net wealth below that.

 

[moneymakeover]

I don't think it's critical to arrive in 2032 with 950k in savings.

It should be possible to get another mortgage aged 54.

The risk I see is an increase in interest rates.

That would hit stock prices.

Similarly repayments would increase in line with ECB tracker rate.

Therefore as pointed out already the sensible approach is to reduce debt.