Pay off mortgage or invest

[Peevy]

I am fortunate in that as a result of an inheritance I can pay off my mortgage

Details €220,000 outstanding
Interest rate 5.5%

I have cash on deposit for a rainy day - my job is secure .

Should I pay off the mortgage or invest ?

Would it be worth asking the bank (aib ) that if I pay off my mortgage will they
Give me a reduction? After all they are cash strapped and I am giving them a ball of money !!

 

[PadKiss]

Hi Peevy
if this is your home loan it may make sense to clear your debt with that level of interest rate. The ball of money is still payable to the bank and as they are currently being repaid over the term of the loan there is no reason for them to give you a reduction in the amount outstanding. Make sure your loan is on a variable rate when you go to pay it off. If its on a fix rate at present wait till the term finishes as you would have breakage penalties. If this is an investment property that may well change the answer above, from a tax efficiency point of view. But esentially if its your home i would repay the loan, you will have no further home loan to pay and the money saved could be put any number of areas like good tax efficient use in building a retirememnt fund for example. Hope this helps Padraic

 

[Peevy]

PadraicMany thanks . Yes it's my home ..seems like a not so clever question in hindsight , but I always like others opinions . I am on a variable rate and no penalties apply for early settlement.
Thanks