When does it make sense to pay off tracker?

S

Stevo2006

Registered User
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142
Hi,

We have been in the fortunate position of being on a tracker of ECB+0.5% for the last 14 years or so. Now, with interest rates going up and who knows how long for and where they will peak, i am wondering if it now makes sense to pay off the loan fully. We have approx €122k and 11 years left on the mortgage and are in a position to be able to pay it off if need be.
We dont have any other debt.

Thanks,
Stevo.
 
Assuming you are maximising your tax-relieved pension contributions and you have €122k on deposit earning approximately zero interest, then it makes perfect sense to pay off the mortgage.

It gives you a guaranteed, tax-free return.
 
Your financial priorities should usually be:
  • Paying off expensive debt (credit cards, personal loans, car loans, etc.)
  • Building up an emergency fund in a savings/current account (3 to 6 months' living expenses)
  • Saving money for any expenses you will have over the next few years (kids; buying a car; childcare; home renovations; adult children going to college, etc.)
  • Maxing out your pension contributions (very large tax relief is given)
  • Overpaying/clearing your mortgage
in approximately that order. Consider posting a thread about your situation in the Money Makeover forum.
 
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