Pay off mortgage or invest?

[Annie M.]

Hello sisses,

Tanong ko lang po what your opinion is on my situation.

I am getting married later this year, and my fiance and I have decided to live in my condo kasi malapit sa work naming dalawa. Yung condo nya, papaupahan. 

His condo is fully paid. He has been good with savings eh -- mas madami syang pera sa akin (pero mas madami akong shoes kesa kanya - hahaha).

I still have a mortgage on my condo, around 1 million pa.

My fiance has enough money to pay it off, and he wants to. Sabi nya, when we get married, conjugal na lahat anyway -- and he doesn't want us to have this mortgage anymore.

Wala kaming any credit card debt. If we pooled together our savings, we will have a decent emergency fund. We also have life insurances. We will share one car -- yung sa kanya (pinagbili ko na yung akin). His car is second hand and fully paid. 

So wala na kaming ibang debt except this mortgage of mine.

It will be nice to pay it off, for peace of mind.

Kaso iniisip ko lang -- hindi kaya mas malaki ang kikitain nung pera in mutual funds?

Ang interest rate ng mortgage ko is 12%.

Ang return ngayon ng mutual funds is 20% or more.

So parang on paper, mas may sense mag invest na lang muna sa mutual funds.

Any opinion will be highly appreciated, especially those sa mga nakaranas na ng ganito. Thanks!
 

[amethyst028]

^ask him to pay p500k sa condo mo that way maliit na lang ang huhulugan mo. and if you plan to rent it out may income ka pa talaga sa unit.  then put p2-300k sa mutual fund. then the rest emergency fund or invest it somewhere else. iba rin kasi may hawak kang cash in case a good opportunity pops up or there is an emergency or whatever. hindi mo naman talaga masasabi e. as long as may cash on hand ka you will feel more secure.

[shegie_285]

Subscribing. Im expecting money soon and I am actually thinking of using it to pay my condo mortgage too. my mortgage interest is around 10%, its variable at the moment. The mutual fund is interesting but could be risky. 20% is high kaya I feel risky, but if you can hold on to it naman long term ok lang. If money is earning more than interest expense then better to invest. Depending on the investment risk, I guess sis amethyst028 is a good suggestion para mix.

Dagdag: Napagoogle ako bigla is 20% is that a one year or more than one year return? If say its a 2 year return mas ok na bayaran mortgage.

[Annie M.]

Subscribing. Im expecting money soon and I am actually thinking of using it to pay my condo mortgage too. my mortgage interest is around 10%, its variable at the moment. The mutual fund is interesting but could be risky. 20% is high kaya I feel risky, but if you can hold on to it naman long term ok lang. If money is earning more than interest expense then better to invest. Depending on the investment risk, I guess sis amethyst028 is a good suggestion para mix.

Dagdag: Napagoogle ako bigla is 20% is that a one year or more than one year return? If say its a 2 year return mas ok na bayaran mortgage.

I think 20% is a one-year return, kung tama yung info na nakuha ko based on Sunlife and other mutual funds etc.

Okay din yung suggestion mo amethyst028.  I never thought about it that way -- na hatiin, I mean. I'll talk to him about it.

Eto kasing fiance ko, ayaw na ayaw ng may utang. More of emotional sa kanya yung pag pay-off ng mortgage. It will give us emotional security daw, knowing we own the unit outright, that we have a home no matter what happens. Ang point nya, paying off the mortgage will drastically lower our monthly expenses and make like easier.

[ikaela]

Gusto ko plan ni amethyst028, I would go for that. Win-win for all.

- less monthly expenses, fiance happy
- Have some money left over for investment
- If investment earns/someone rents, great, you can use it to pay off more of the mortgage
- If investment loses/no one rents, it's okay, mortgage is partly paid off anyway
- Still have cash on hand, cash is king

Kung may mahanap ka na investment that would give you monthly income at a rate more than 12% p.a. (like AFPSLAI), wow, sitting pretty ka na. Paid na ang mortgage mo every month, even if you don't lift a finger. Okay naman yung mutual fund, but ang tagal ng hintay, and minsan lugi ka pa. Minsan naman, kapag kumikita ka na, nakakapanghinayang i-pull-out kasi pwede pa lumaki yung earnings. But that's just me. You might be less greedy than me.

[aquacharly]

Personally, I would pay off the mortgage. Henceforth, wala ng intindihin pa. Full blast on making more money    

[j.adore]

Invest so that the returns can pay for the mortgage.

[daveigh]

Personally, I would pay off the mortgage. Henceforth, wala ng intindihin pa. Full blast on making more money    

Same for me. Hindi ka pa naman sure kung magkano kikitain ng investments mo in the future, at least wala ka nang utang. One less thing na iisipin.

[ikaela]

For me naman, hindi ka sure na kikitain mo uli yung 500k na yun. Even if you have a stable job or profitable business, you never know what could happen. Yung 500k now, it'll be worth more than any 500k earned in the future. Better make it get to work so that it'll pay off your debts for you.

[sachism]

Annie,

The rates in MF are never fixed so there is a big chance that your mortgage interest would be higher. If you can find an investment with calculated risk which has higher interest than the mortgage, I would say, invest the money.

I did this. We bought a property which offered 0% interest for 18mos. We had the cash to pay it in full but there was an opportunity to invest the money somewhere else which has bigger annual interest. So I invested an amount which would give me an interest which is enough for the monthly mortgage.

We have already fully paid the property and I still have the full amount.

Hope this helps.

[phexchanger]

^Sis, yours was a very good decision since payment is at 0% interest for 18 months.

Is your 12% interest on your mortgage fixed for how many years? If it is fixed until the end of the term, I suggest paying it off now. 12% is very high considering interest on mortgages now are at only at about 6% to 8%. Unless, of course, you can find an investment that will give you a guaranteed rate of 20%+