Author Topic: Lump Sum - Mortgage or Invest  (Read 2319 times)

lbdance

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Lump Sum - Mortgage or Invest
« on: June 21, 2014, 03:57:40 AM »
So I know this has been asked many times before, but I am looking for a NZ perspective on this one.
We are debt free other than our mortgage. We were on track to pay this off within 18-24months but... My DH has recently resigned from his full time position, to work for himself.
Whilst we are fine to live off my income and continue our regular repayments of the mortgage, the majority of his income which was extra towards the mortgage is now no longer there. I am confident that in time he will be earning a similar amount through his own company, but I am giving this time to establish. (Regular repayments are more than the minimum and will have it paid off in approx 5 years)

The company he used to work for was an international company, as such the super scheme there was not through kiwisaver (and better!)
This means that as he has now finished, we have the ability to do what we want with his contributions from that period of employment.
The figure is not huge, but I am trying to decide if it will be best to put the lump sum on the mortgage (which has been our main focus until MMM) or put it towards the investments whereby it will give them a good boost.

Until recently I would have strongly tended towards boosting the investments, more from a psychological tact, as I know that for me the mortgage is a clearly defined goal, whereas purely investing does not have the same clear cut targets where you can guarantee a figure on a date. So a jump in this amount would make some huge progress here - and have the psychological benefit of seeing some good progress in this area. My DH is keen to put the $$ towards the mortgage mostly because he wants to see the reduction and perhaps have a solid feel that he is still contributing. (The lump sum will be approx 1/4 of what the mortgage currently is). However with the recently increase in interest rates, and a portion of our mortgage being floating (to take advantage of an offset account) I am starting to think that it might be best to put it on the mortgage.

Not really a topic I would discuss with friends, so looking for some other opinions from similar minded people of the internet :)

deborah

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Re: Lump Sum - Mortgage or Invest
« Reply #1 on: June 21, 2014, 04:09:04 AM »
If you have an offset account in your mortgage, you could pay the money to your mortgage and still use it for an emergency if you need to? If your DH is just starting out, there may be times when you need extra liquidity.

 

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