Pay down or invest with lump sum?

N

naasrd

Guest
I've just come into 90,000 cash, I have 57,000 left on my mortgage having borrowed 60,000 4 years ago. I want to invest in a small apartment in Austria, should I pay off my mortgage and borrow the 130,000 for the apartment or take out a seperate mortgage for the Austrian property and put some of my cash towards it?
 
It is hard to say with so little information about your financial circumstances. Is the 90,000 all you have or do you have other savings and investments? Do you have an adequate pension?

The first thing you should do is pay off all non-mortgage debt i.e. personal loans and credit cards as the interest rate you are paying on these is higher than your mortgage and probably higher than the return you will make on the investment property in Austria.

The only other comment I can make in light of the information provided is that there are many other investment options out there to consider apart from property and while 90,000 is not a fortune it should be enough to start a reasonably diversified portfolio. You should ask yourself whether you are investing in the apartment in Austria because you think it is the best investment for you or whether you have allowed other factors (relatives, peer pressure, estate agents, beery skiing holiday, snowy brochure) to cloud your judgement.
 
Thanks for that. Have a basic pension 100 pm, 4000 in tech and telecops shares with ptsb, (used to be 7000 but fell), the residue of my eircom shares now in vodafone are around £1000. I'm mid 40s and was hoping the rental would bring in a little more than intertest. There's also a studio apartment for 50,000 that I'm really serious about. I was considering buying it and selling it after 3 to 4 years. This is the only time I'll have this kind of money and I really want to do something sensible with it, any suggestions would be very much appreciated.
 
Just a few suggestions:

1. Do not rush into anything - there will be another apartment which suits you next year and another the year after that. If you are unsure of what to do, you are probably better off sitting tight for a while.
2. Make sure you do your research before you commit to anything. Do you know what taxation agreements are in place between Austria & Ireland? Do you know what fees (legal etc.) are involved? How sure are you of your anticipated level of rental return? What yield are expecting? Are there additional costs (legal, estate agent, tax etc.) involved in selling of which you are not aware?
3. You seem to have inadvertently picked up very poor shares in the past. A lot of Irish people have had similar experiences in the past but you should not discount the benefit of holding shares as an asset. You could buy some ETFs at low cost through a broker which would give you a widely diversified range of shares in major world economies.
4. An apartment for 50k sounds very cheap. Are you looking at this because you can afford it or because you think it is a good investment? Property investment is not the easy money it once was. There are other ways of getting exposure to property markets at low cost - such as purchasing units in property funds.
5. Take it easy. Read a lot of the 'How to' stuff on AskAboutMoney - there is plenty of good advice. Arm yourself with knowledge of the facts before handing over your precious nest egg.
6. Remember that most people you ask for advice are only interested in skimming a % of your money while investing it in something which may or may not be suitable for you. Keep that in the back of your mind.
7. A Mercedes CLS retails at about 85k. I'm just mentioning it.........
 
Thanks once again, I guess I'm trying to rush things because 13 years ago when I had some cash I thought buying a new apartment on Batchelors Walk at 44k was outragous so I paid off the mortgage and put an extension on the house. ETFs seems where I'm heading, am thinking of sticking 35k into a Goodbody's equity fund and leave it alone till I hit 50.
 
A Mercedes CLS retails at about 85k. I'm just mentioning it.........

Are you mad??

Personally I think the apartment is as good as anything mention above. The Austrian market is only just opened up to buyers and has currently some good opportunities. One thing though make sure its in a reasonable resort - If its below 1800m, then dont go near it (inconsistant snow below is affecting growth in all countries). If you dont know ski resorts then enlist the help of someone there who does (money well spent). Regardless of what people say selling other things, good quality ski resorts will be a great investment.
I do agree though that if it's pure investment you are looking for and you are not interested in Skiing, there may be better avenues. I would look at German commercial property funds if so.
 
Skiing apartments generally not a great idea for rental return -- short peak season and pretty much no summer rentals (except in the minds of salesmen who speak with great confidence about walkers and hikers etc). Always better going to a city if you want a decent level of rental return from a residential investment.
 
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