Pay off investment or annuity mortgage

I have a 260k offset annuity mort with NIB which is at 3.1% variable over 30 years on my PPR.

I also have a 220k interest only mort. with NIB, which is at 3.2% over 25 years on an investment property.

After the int. only mortgage repayment is met, and tax and other bits and pieces are taken out to cope, I have about 300e left a month from the rent. Im trying to decide which is best to do with this. Would I be best served by reducing the capital on the annuity or the interest only mort, or even investing elsewhere on a long term plan?
If the outcome is to pay off the PPR mortgage, as it is an offset, would it matter if I just deposited the money to the offset account or actually reduce the capital itself?

thanks.

Since you have an offset mortgage leaving any excess on the related current account means you will be saving interest on that amount of savings at 3.1%

Compare this to the interest rate you would receive from being pacing it in deposit, e.g. Rabo Direct are offering 2.4% (3% less DIRT), Northern Rock might be slightly better have a look at http://www.askaboutmoney.com/clubman/BestBuys.htm

So in the short term that looks best

3% return on your money may not be great but some people would like the safety of the money being availible at any moment

If you would like to reduce your PPR I would recommend leaving the excess in the mortgage related current account (reducing intwerest due each month)and when it reaches a level that you are happy to have as a cash reserve (in case of a rainy day) everything after that (usually once a year) pay into PPR mortgage account

From a tax point of view the last loan you want to pay off is the investment property loan, this attracts tax relief (up to 47%)

You own home loan (unless your area first time buyer) gives you tax relief after the first €5080 of interest paid (and still it is at 20%) so youwill get no tax relief on that loan for anything above €163,871

The next issue you should address is future cashflow needs and your own investment risk concerns

If you want to invest the money there are loads of options but these depend in your personal attitude to risk

Whether it me property, equities, funds, etc

If you post more info I am sure people will help guide you in that area


stuart@buyingtolet.ie