Money Times: Readers are concerned about all sorts of issues

Personal finance columnist Jill Kerby answers your questions in her Money Times column...

Paying off a mortgage

Mr TK writes: I have money in a credit union savings account. Should I use some to make a lump sum payment on my mortgage?

You don’t say in your email how much money, what kind of dividend (if any) it earns or the size of your mortgage debt. But I will assume the interest you are paying is more than any yield on your savings. This is a universal complaint of every mortgage holder, except perhaps the luckiest of tracker mortgage holders who may only be paying 0.5% or 0.75% – the premium their bank originally charged them above the ECB rate, which is now zero.

By paying off your mortgage you will not only save compound interest payments on the remaining capital, but you will clear the loan sooner than the agreed repayment term and, for many people (I am one who cleared a homeloan early) you will achieve a certain peace of mind.

You still need to consider two things – will your lender let you pay off your loan without penalty; this usually only applies if you are on a fixed term contract. And paying off the loan means you may not be able to borrow as easily (and probably more cheaply) against your existing equity, say to build an extension or to make renovations. Without a mortgage, you may have to borrow at higher personal loan rates.

Finally, have you any idea what you will do with the money you no longer have to use to pay the mortgage if you clear the loan?

This might be a good time to get a wealth review from a good financial adviser. If your pension is not fully funded, directing the cash into your retirement fund will also help reduce your income tax bill.

Gold as a savings option

The Irish banks pretty much gave up on providing storage facilities for customers who wanted a safe place for documents, valuable jewellery, coin collections, years ago. It was too expensive and demand was not high. There are specialist depositories – Merrion Vaults in Dublin (also a gold bullion dealer), Goldcore.com, bullion dealers with offices in Dublin and London whose sister company Secure Storage Ireland in association with Loomis International provides a gold and other precious metals vault facility in Dublin (and in London, Zurich and Singapore). The cost of storage ranges from 0.49% to 1% of the value of the precious metals.

The cost of a purchase depends on the daily spot price of the metal (gold, silver, platinum being the three most popular) and whether it is in coin or bullion form, the latter offering the keenest price. Certain coins command higher retail prices due to buyer preference – American gold Eagles tend to be more in demand than Austrian ‘Philharmonics’ or Australian ‘Kangaroos’ – and supply and demand.

The premium the sellers of gold charge will vary, from 2%-3% to 10% – depending on real-time supply and demand and perception of geo-political, and now, pandemic, risk.

The price of gold has surged since the pandemic began and quantitative easing – the printing of money by central banks to keep the global financial system and economies from imploding – has been resumed at an even greater pace than after the 2008 economic crash.

Sellers are pricing in the potential risk that conventional currencies will be unable to keep up with price inflation if and when all the extra money being printed ever circulates on the high street.

You might want to take impartial, fee-based advice from a financial adviser about all the options for your grandchildren’s savings. These might even include eventually shifting this money (especially if you keep gifting them the tax exempt €3000 every year) into personal pension accounts from age 18, which could set them up with not just a tax efficient investment but provide valuable back-dated income tax deductions once they start earning taxable income.

Goldcore, the European franchise holders for Perth Mint Certificates programme, also offer a regular GoldSaver monthly savings account.

How long will the Jobseeker payment last?

There is quite a lot of confusion about the changes to the PUP payment and what happens now that the flat €350 per week ends for anyone who was working part-time or on a casual basis and was earning less than €200 per week, like our reader’s daughter.

Those workers will be put on a payment of €203 per week – similar to the maximum Jobseekers Allowance. What was decided last week will not apply to your daughter anyway. You need to be over 18 and seeking full-time work to qualify for Jobseeker’s Allowance, which is a means-tested payment. (Jobseeker’s Benefit requires a qualifying number of PRSI payments and also requires that the person looks for and is available to work full-time.)

You can see all the qualifying conditions by following the Jobseeker’s allowance link at citizensinformation.ie

The PUP was an exceptional payment with little nuance for someone’s age, how much they were earning or their employment and social insurance record.

The 12 weeks or so that your daughter received the €350 and spent very little of it means she should have nearly c€4,000 in her account.

If she does get a part-time job again next year, that money, added to this windfall could even go towards helping to pay for the cost of any third level studies she may want to pursue.

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