Medium/Long Term Investment Options

A

akhenaten

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My SSIA matures at the end of April. It's with Bank of Ireland and I've been considering two options. One is to close the account and use it to pay something off my mortgage.

The other option I'm considering is to continue saving with Bank of Ireland's new scheme which offers 25% on top of your regular savings amount for the first 6 months, as long as you contine saving for an additional 3 years. This is an equity based plan (my SSIA is also equity based).

I'd like to try and grow my lump sum further and then pay the larger lump sum off my mortgage in 3/5 years or maybe longer.

My question - are there any other comparable offers in the market? Does this make good financial sense? I'm aware, of course, that with the equity based plans, there is risk involved. Or would one of the high interest rate deposit accounts make more sense?

Any opinions, advice would be greatly appreciated. I've read a lot on this site, and on the various banks websites, but I'd be interested in what people think, and to be honest, I'm more confused than ever.

Confused...
 
Do you have any other debts? If so prioritise those for reduction/clearance. How big is your mortgage compared to your income? If you are talking about c. 5 years investment term then you might want to consider a low charges unit linked fund (a low-medium risk/reward fund if necessary) in order to try and beat deposit returns over that period. Ultimately a lot depends on your specific personal/financial circumstance and one would need a lot more detail to comment authoritatively. If in doubt get independent, professional advice - not from tied agents such as your bank staff.
 
I do have a personal loan - approx 6,500 with just over 2 years left.

My mortgage is approximately 6 times my income - however this will change dramatically early next year. I was working when I first took out the mortgage, but I quit my job to do a PhD. I'm now nearly finished that, so I will be back working again early next year and my income should substantially rise.

Maybe the sensible thing to do here would be to clear the personal loan, save the remainder of the SSIA, and use the money I was paying into the personal loan as a topup payment on my mortgage every month. I'm keen to start getting this mortgage down one way or another. Is it more efficient to make a large lump sum payment on the mortgage or to make a regular monthly topup over and above the required amount?

I also have some shares which I was consider cashing in..again to pay off the mortgage. But with the ISEQ still rising I might hold on for another while.
 
What rate is the personal loan at? Any penalties for clearing it early? Assuming normal unsecured personal loan rates of up to c. 10% and no penalties for clearing it you would probably be better off doing so as it's your most expensive debt.

With a mortgage 6 times your income it might make sense to reduce that debt too. A lump sum capital repayment on a variable/tracker rate loan (no penalties unlike most fixed rate loans) would yield more significant long term savings than monthly accelerate repayments although the latter is good too. See Karl Jeacle's mortgage calculator to see what sort of savings might be possible.

In general on the basis of the partial information posted so far I personally suspect that dealing with your debts would be a better idea than saving while maintaining the currentl level of indebtedness.

If in doubt get independent, professional advice for your specific situation.
 
The personal loan is at 8.99% and there are no penalties for clearing it early.

My mortgage is at 4.15% - fixed for another 2 years. There are definitely no penalties for making overpayments on a monthly basis. I need to check if there are penalties for a lump sum payment. I have just over 32 years left on this mortgage (approx. 165,000) and I estimate that the regular monthly overpayment will reduce this term by approx. 15 years. Once my income rises, I can reduce it further.

Thanks for the link to the calculator - it's a handy tool to have :)
 
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