Lump sum towards tracker on home or buy to lets ?

P

pge

Guest
Hello, advice greatly appreciated....
Have lump sum of circa 80k.
Options :
1. pay off Tracker on home , .ecb +.85%, 330k, hse worth 300k.26 years left.
2. pay towards 2 buy to lets at 4.43%, A loan 285k, B loan 185k. both worth about 180k each. both at 22 years.
3. pay off top up loan of 80k , at 3.3%. 22 years.
so total debt of circa 220k if i was lucky enough to be able to sell the lot....
I am leaning towards paying off the top up loan entirely , at least then that is one loan less to worry about. partner and I in secure employment on total income of circa €100k.
I know and appreciate that this is not as serious a problem as many people have but any advice is welcome.
 
Do not pay it off your tracker anyway. I Would keep 10k for an emergency. The other 70k I would pay off the more expensive loan which I presume is a SVR mortgage. Psychologically it may sound good to have one loan less but logically you will save more by paying off the more expensive loan. I am presuming that you are getting some form of tax relief on the interest of the top up loan.
 
First issue
Will the home loan lender give you a bonus for paying part of the tracker early? If it's BoSI, they might. If it's one of the state lenders, they might do so at some time in the future. For this reason, I would be slow to pay off the tracker

Second issue - what is the net rate on the buy to lets
Are you getting tax relief on the interest?
If so, the net rate of interest is
4.43%
x75% = 3.3%
tax relief @50% = 1.15%
Net rate: 3.3%

Still a lot higher than your home loan, so it's worth paying off the buy to lets first

Third issue - you should consider selling one of the investment properties to reduce your exposure
Depending on your income, €600k of property and €880k of loans may be too high an exposure. If so, then you should consider selling one of the investment properties. If you pay down Loan A now, you will be in negative equity on all three properties and may not be able to sell.

Maybe look at selling one of the properties as soon as possible and keep the €80k towards the shortfall.
 
mcloving said:
greedy, this is a fine example of what has got ireland in a mess
Click to expand...

It's human nature to strive for better. He's one of thousands - and it's an old story at this stage. I don't think scorn raked over old wounds is helpful here - and it doesn't answer the OP's query.
 
many thanks for the replies, yes i thought that paying down the higher interest loan would be more beneficial to us.
In relation to the actual interest i am paying on the buy to lets please explain in more detail how the net figure is calculated, .... i know that i can off set 75% of the interest against rental income but i do not understand the calculation brendan did as regards tax relief on this sum, what tax relief ?
PS. ta for the understanding on my post, serotoninsid. some people just cant resist kicking a man when he is down.......
 
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