Paying off part of Mortgage or investing Inheritance Funds

Paulyman

I received Inheritance of €100k. I have 2 options in which to use this money 1. I have spoke to Bank of Ireland. They have advised me of 2 of their bonds which they can be invested in. The Dynamic 95 Protected Bond 4 or The Prime Funds Investment option. Sounds great until you get to the projected expenses and charges & taxation of 41%. I find it ridiculous that the government (don't get me started on the Inheritance tax I need to pay) can charge such an amount on proceeds. While low risk, you still may lose some of the investment or indeed may little on the funds.

I inherited my late fathers house. I have therefore decided not to live in the house I bought in 2008 and rented it out last year. However as I have a "2nd" home, I need to pay inheritance tax. I am looking to sell this house this year and use the proceeds of the sale to pay for the tax. Currently I have €140k to pay on the 2nd house (the mortgage of my father has been paid off). Instead of investing would it be waster to use €70-€80k of this money to pay off what is due on the mortgage so that the settlement figure is a lot lower when the time comes to pay it off?

I have a meeting with the bank next Monday but want the best advise for myself before even thinking of going forward

Geuze

In my opinion, BoI are a high cost provider, I would shop around.

People can receive 320k from their parents free of CAT, lifetime limit.

adam88

People will tell you to pay off your complete inheritance off against your mortgage. It will be stated that you’ll find it hard to earn your interest rate e.g 3% or higher in funds in this country. Their technically correct but why is it that lending institutions especially credit unions have seen such a vast increase in their share guaranteed loans? People like to have a nest egg.

For e.g I recently cleared a credit card debt for 4K, I had that amount in savings but didn’t want to use my savings to pay the debt so I took out a loan on the strength of my savings and am paying it back. Yes I’m paying interest that could be seen as wasting money but I know in my heart of hearts I’ll never save that money again but I will pay back a loan over that period.

Defo paya chunk of money off your mortgage if you are on a variable rate mortgage. It will bring down your repayments but most definitely put a nest egg away for the rainy day.

Humour Me

If I were you I would be meeting with an independent financial advisor. The bank is only interested in selling you their own products which may not necessarily be the most suitable for you.

PHG

Agree with above regarding a financial advisor.

Any decent one should tell you to have 3 to 6 months cash in an Emergency fund. E.g. if you lose your job, some big unexpected bill comes in etc. So you will not be financially stretched. Then throw the rest at any debt you have and clear it.

Thanks,

PHG

Paulyman

I have decided to put some money into An Post Savings Bonds. It is safe and for a 10 year period has a interest rate of 16% with no DIRT or taxes. The rest I will pay off the mortgage. Seems a good solution in the circumstances. Safe and no risk like my bank was offering

The J Stands for Jay

Paulyman wrote: »

I have decided to put some money into An Post Savings Bonds. It is safe and for a 10 year period has a interest rate of 16% with no DIRT or taxes. The rest I will pay off the mortgage. Seems a good solution in the circumstances. Safe and no risk like my bank was offering

You should.adjust that plan a little. That 10 year solidarity bond is only 1.5% interest a year if you keep it for the 10 years. If you need to take it out earlier, you get a lot less.

You need to have some cash available quickly for emergencies, and it may be an idea to have some of the money on for a shorter term. State savings have 3, 4 and 5 year products too if you like those.