Payoff mortgage while still receiving tax relief?

I am single, in my early 30’s and in full time employment with a non-contributory db pension. I bought a house last year (first time buyer) for 260,000Euro and have a one year fixed mortgage of 200,000Euro with PTSB which is approaching its 1st anniversary. I have approx 170,000 Euro in an online demand savings account with Northern Rock. I can comfortably service mortgage repayments of up to 1200Euro per month. I would appreciate advice on how to maximise the financial benefit.
Is it best to:
A/ Payoff the mortgage as soon as possible.
B/ maximise the benefit of the tax relief on the interest (which is supposedly going to increase again in the next budget) and leave my savings collecting interest until I no longer qualify for tax relief.
C/ Switch my savings to a current account mortgage.

I would also be happy to consider any other options.
Thanks in advance.

My advice would be to pay off the mortgage, or at least a large proportion of it. If you are comfortable with the current mortgage repayment amount then you could always start saving €1,200 a month with Northern Rock again if you like. This way you would be debt-free and your savings will start to grow again quickly.

Of your A, B ,C options

A, this is probably the best. You may have a small cost for property deed storage. Although lots of people get their bank/solicitor to hold them for free. You also have lost opportunity cost on potentially achieving better returns with your savings invested elsewhere (option D).

B, maximising the benefit of tax relief on the interest as an end in itself doesn't make sense. Instead simply calculate the effective interest rate you're paying after relief and compare it with leaving the money on deposit which is subject to DIRT or compare with clearing the mortgage. You'll also have the costs of mortgage protection.

C, With this option you'll have switching costs and the interest rate will be higher. You'll continue to get some TRS and the off set savings will not be subject to DIRT. You'll also have the costs of mortgage protection.

onlyonpaper said:

A/ Payoff the mortgage as soon as possible.

Click to expand...

You should be able to estimate the savings attributable to this course of action using Karl Jeacle's mortgage calculator.