Mortgage €36k left, pay it off or not ..

B

bobalong

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Hi Guys,

We have kept our SSIA moneys without dipping in to them. We now have the opportunity of two things:

1. We could pay off the mortgage ( variable €400 per mth ) - the €36k thats left. Loan expires 2017

2. Keep paying the mortgage and go get an extention to the house - cost €34k approx.

Just want to get objective advice on this one based on current economic situation, potential interest rate rises and the like. We wouldnt be the best paid in the country, pretty much average industrial wage.

Would it make more sense to pay off the mortgage now and then go get loan for an extention to part pay for it? loan about €20k.

In essense - I keep hearing conflicting advice that its either better to get rid of your mortgage ASAP OR keep it for full term as its relatively cheap money.

I realise loads of this kind of message probably appears, apologies if so as it may get boring for some to see this kind of message!

Bob
 
Re: Mortgage €36k left, pay it off or not ..

I'm no financial expert, but here's my tuppence worth.

Can I ask what interest rate you're at at the moment? Is the extention essential now or can you wait a year or so? Personally, I would say if you can wait to pay off the mortgage and then save what you'd be paying out every month towards the extention. With variable rates set to rise, I think it would be the best option. However, people with more financial knowledge than myself might advise something else.
 
This is a good to time to be getting value for money from builders, so if you really do need the extension, there is no time like the present. You would be crazy to pay off the mortgage and then borrow a personal loan (at a higher rate) to fund the extension.
 
Also no expert, but the likihood of you getting a loan to fund the extension is practically nil.

If you need to build the extension, it's probably a good time as you have the funding & builders are offering significantly better quotes to do the work than they would have a few years ago. While their prices won;t rise too quickly, at least you'd have the work done & be able to utilise the space sooner rather than later.

If you don't want to clear the mortgage in one go, you could alway (after the extension is sorted & if you have some spare funds each month), up your repayments.
 
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Thanks guys,

Appreciate answers. Reading same with interest. In answer to the interest rate - 3.75%. I remember when we started way back it was 7.8%.

Cheers
Aidan
 
Considering that you are considering building an extension, then i think you should use some of your SSIA to pay for same direct rather than pay mortgage and re-borrow... if you paid mortgage, then the bank may not offer you a loan again and then you lose out on extension

Also I think you should keep a portion of your SSIA in a saving account to allow you pay your mortgage in the event of job loss/ loss of income...rainy day fund and there are a lot of them at the mo!!
 
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