Paying off a tracker mortgage. Money Doctors column in Irish Daily Star 24th August 2023

Q. I received an inheritance of € 59,000 from my late father’s will. It is all tax free and I have an outstanding mortgage of € 284,000 on a tracker rate. With income of over € 95K between the two of us, we can well afford it despite two young children aged 7 and 9. I am getting confusing advice as to whether I should pay this off with my inheritance or keep it and invest it elsewhere. Deposit rates are hardly an incentive. What does the Doc think ? Love the column. Thanks Gerry – Limerick

A. Tracker mortgages were the modern day manna – sadly now a thing of the past Ger ! With the ECB rate increased last month it is arguable that you should at least consider a fixed mortgage interest rate now – especially as there are a couple of more hikes due…Your home loan is still though the cheapest long term money you can borrow. With two young children you have hefty expenditure in the coming years ( putting one child through 3rd level alone will set you back € 42K in total ! ) so firstly you would need at least € 20K in a Rainy Day Fund ( RDF ) for those emergencies, sudden loss of income or investment opportunites. Best deposit investment is the NTMA’s 10 year National Solidarity Bond available in post offices and online – 16% tax free after 10 years equivalent to 2.24% gross each year. Best return of any asset class is the stock market – from 1991 to 2020 the average annual growth was 10.72% and you could still find a decent managed fund to suit your risk category that might yield a better return than that available on deposit. Take professional independent advice or email me for a fact sheet on options. Switch the tracker for a fixed rate for the moment !

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