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Q. I have a tracker mortgage with a balance outstanding of €84k. I will be in receipt of a lump sum of approx. €65k when I retire at the end of the year. Should I lodge it to reduce my mortgage?
A. It is difficult to give a definitive answer without knowing more details. I am presuming you will have a pension from your employment when you retire. I would need to know what income you will get from your pension and how this meets your lifestyle requirements.
You also need to establish if you can meet your existing mortgage payments from your reduced income. It may be necessary to reduce your mortgage to a level which you can sustain from your pension income.
Generally speaking you would not be advised to reduce your mortgage, as the rates on tracker mortgages are very low at present. Indications are that they will remain so for the immediate future. The average tracker rate is approx. 1.5% , so by investing your lump sum in one of the more cautious investment funds in the market, you would expect to generate a return significantly higher than the rate you are paying on your tracker mortgage, perhaps in the region of 3-4%pa or more over a period of 3-5 years.
You would benefit from a full analysis of your financial situation by an independent financial adviser, following retirement and before making any long term decisions as each case is different.
We at MONEYPLUS offer an hours consultation free of charge specifically for this purpose. Should you wish to avail of this please call us on the numbers below.
MoneyPlus are experienced investment and financial brokers and have been in the business of financial and investment planning for many years. They are dedicated in providing bespoke financial planning advice to clients. If you would like further advice on the above or any other financial information please contact Belinda McCauley in our Boyle office on Bridge Street on 071 9194000 or [email protected]
Boyletoday.com/MoneyPlus accept no responsibility for any decisions taken as a result of advice provided in this column. A reliable recommendation can only be made following a full detailed consultation taking an individual particular circumstances into consideration