Pay Off Mortgage?

ruben

Hi All
I looking of some advice please, I have pretty much made up my mind what I'll do but on the basis that two heads are better than one and all that!

I have an investment in a property company in the UK. The portfolio is performing well and is in a healthy position. A major shareholder is also the Management company and makes sure all is ship shape.

The plan was that the investment will be cashed in, in about 10 years and the funds will then be my pension (after CGT and Currency diffs). Right now the value of my share is approx 110,000 Stg.
I have about 6 years left on my mortgage for my home. It's a tracker with PTSB at a rate of .8% above base. The bank have offered me a settlement figure of approx 109,000 euro - waiting on the letter to come to get the exact figure. The settlement promises a saving of 10%.

If I sold my investment and paid off the mortgage, then continued to save the equivalent amount each month in order to have a pension pot, would I be better off than continuing to pay the mortgage and cash in the investment in 8 - 10 years?
Any thoughts please?

RichardAnd

My advice is not to put private details of your financial affairs in an open and public forum. Look for advice from an advisor, boards.ie isn't the place to ask this.

ruben

Erm..thanks RichardAnd, I dont feel as though my annonimity has been comprismised?

Joey the lips

ruben wrote: »

Erm..thanks RichardAnd, I dont feel as though my annonimity has been comprismised?

I agree.

Have you considered asking a mod to move this to investments in the biz section. This is more political discussion in this part.

TheInquisitor

Whats the return on the investment per year at present?

ruben

Whats the return on the investment per year at present?

As with most property investments, over the last few years the return has been negligible, perhaps around 2%.

Dannyboy83

If it were me in your situation, I would pay the mortgage off immediately.

Interest rates WILL go up, and there is no guarantee as to what will happen with tracker mortgages in the next few years.

And judging by current events in the UK, that property investment is going to become less healthy.

Good luck with whatever you decide to do.

jank

My advice is not to put private details of your financial affairs in an open and public forum. Look for advice from an advisor, boards.ie isn't the place to ask this.

Seriously!! :rolleyes:

anyway...

A bird in the hand is worth two in the bush. I would sell and have no debt what so ever and invest your present mortgage payments into long term blue chip stocks. Agri-business is going to be big in my opinion in the coming years.

Good luck

Neffa2

Euro interest rates are going to rise. The medium term outlook in the UK is not healthy - their property market still looks overvalued to me. If you can be debt free now and commit yourself to a savings plan from this point forward, you'll be better off than 95% of people.

So, sell the stake, pay off the mortgage.

Bandana boy

I Would sell the stake and find another investment
That Tracker is an outstanding rate if you only put the money in Rabo it would be better than paying of your mortgage.

ruben

Thanks to you all, it's good to get unbiased opinions.

Nody

I'd turn around and ask for 20% off the mortage if paid up front and offering them to save the monthly payment in an appropiate account they offer for the next 3/5 years.

Bandana boy

20% would be tough to get with only 10 years left on the morgtage
My quick caculationms suggest that your morgtage will cost your bank roughly 22K to support over the next 10 years.
They will be making 11K of you in that time frame.So a loss of 11k plus admin costs.
I am guessing at 110K that your loan to value is attractive and carrys little to no risk for them so no benefits there in you paying it down,

To give you 20% now they realise their full loss but save on admin.
I dont know what the market will do in next 10 years and the gap between the cost of the debt and what you pay might increase or decrease but as it stands the incentive for them to give you 20% is small.

-If your loan is longer than 10 years and if your loan to value is poor then 20% is very possible.

PhatPiggins

Personally I think you're getting too little return from the management company. Is there a possibility that the value will go above 110K?

If not I'd sell it and invest it in anything that pays you a higher interest rate then your mortgage. There's tons of options at the mo and even a bog standard package with any Irish bank pays a minimum of 4%.

I wouldn't be so quick to pay off the mortgage if you were confident of getting a decent return on the 110K investement elsewhere. 110K is a lot of money and even with the best will in the world you might never save that much again.

Also I tried to steal your identity using the information you provided but none of the banks were willing to forward me money under the name ruben even though I listed a random property anywhere in Ireland and a share holding in a random property company as security.

mad m

To the OP, did the bank contact you or did you contact them, I have a tracker with Bank Of Scotland, and was wondering whether to contact them asking for a deal to pay off mine, but I have 16 years left on mine @ a mortage of 160k with 0.5 above ECB rate....

TheInquisitor

Id sell without a shadow of a doubt. Getting only 2% is pointless. You want a minimum of 6%. Interest rates are going to go up and put you quickly into the negative at that rate

ruben

Hi mad m,
They contacted me. Sent out a letter with various options for paying it down in lump sums with discount or clearing it totally.

porterboy

Hi ruben, what discount did they offer?

ruben

Porterboy, they offered 10% but I'm waiting for the actual letter of offer to see the details. There may well be a devil there:-)

baby8music

In my opinion you should sell your investment property as property values are continuing to drop, you could be left with something with alot less value in a couple of years. PTSB are offering reduction of years on tracker mortgages if you are willing to pay off a given lump sum. I would pay off perhaps half of the value of your given mortgage & invest the rest. Choose wisely

Black Swan

MOD COMMENT:
The OP is asking for personal investment advice, which may be more appropriately located in Investments, rather than Irish Economy.

ruben

Blackswan, could you move it for me?
Thanks and sorry for the mess up.

OfflerCrocGod

At the moment the rate that you are getting is very good, as has already been posted you can get savings accounts returning more than the interest you pay. The problem of course comes from when the rate changes, if PTSB can keep ratcheting up the rate then they will probably do it. I also don't believe that 2% is an adequate return given the risk you are taking on. A portfolio of large high-yielding FTSE100 stocks would be better imo. Heck, presently a savings account beats that!

10-10-20

ruben wrote: »

Erm..thanks RichardAnd, I dont feel as though my annonimity has been comprismised?

Oh not at all, this is board.ie after all.

You live in Galway, married for more than 20 years, are mad about cats & dogs...

There is little anonymity on the net.

ruben

Oh no!!
My cover is blown:-))!!!
Such telling, personal and identifying details:-))

Onikage

10-10-20 wrote: »

Oh not at all, this is board.ie after all.

You live in Galway, married for more than 20 years, are mad about cats & dogs...

There is little anonymity on the net.

You can do what I did and swap accounts with a friend! Now if I could just convince him to swap gf's...

OP, 2% on an investment is terrible. Sell it.

2.05%, variable and rising over time, is still the cheapest interest rate you will ever pay on a 100k euro loan! Keep it! I won't advise you what to do with it because you have so many options here, but even prize bonds would be better than your current product. If you are unsure about what to do, fixed term deposit accounts for 6 months and 1 year might give you a high enough rate to do some research.