Q My father died recently and left me €80,000. Should I use this to pay off some of my tracker mortgage now that European Central Bank rates are due to start rising? I am on a tracker rate of ECB plus 0.5pc. I am in my late 50s, and have children in college, but no other debts. There is €120,000 left on the mortgage.
A Paying down more expensive forms of credit is always the first option, according to Joey Sheahan, head of credit at online brokers MyMortgages.ie and Author of The Mortgage Coach. You don’t have any other debts, so paying down your mortgage is a good idea, he said. And it is relatively straightforward to do so – just contact your lender directly to arrange.
The fact that you are on a tracker means you are currently on a great rate, he said. So, you could also consider putting some of these funds towards your pension, particularly if you are paying the higher rate of tax, as you will get up to 40pc tax relief on what you put in.
For example, if you put €20,000 per annum into your pension for the next four years (ie €80,000 total), you would get tax relief of 40pc of it which is €32,000. And you could always use the money you save in tax relief to put against your mortgage, or support your children if needed.
You could actually put €20,000 per year in for seven years, meaning you would invest €140,000 gross in your pension, but you would get tax relief at 40pc which means you would receive €8,000 annually, which is €56,000 in total relief. So your gross contribution of €140,000 would cost just €84,000, Mr Sheahan said.
Q We are both in our early 60s and are on the Laya Simply Connect scheme. We are particularly concerned with keeping good orthopaedic cover in place. Is this plan still good cover?
A This is still a good semi-private corporate plan costing €1,361 per adult, according to leading health insurance broker Dermot Goode of TotalHealthCover.ie.
The plan includes good refunds on eligible out-patient expenses and also includes full cover for major orthopaedic procedures in standard private hospitals, he said. If you are happy with this type of plan, he would recommend no change for this renewal as there is no other lower-cost plan that provides the same level of cover.
Mr Goode said there is another version of this plan called Simply Connect Plus, costing €1,471 per adult, which gives better out-patient cover and lower excesses to pay in private hospitals.
Q What is the impact of inflation on my savings?
A During the height of …….