Using an inheritance to repay a mortgage

Question 1

Name 4 things to consider when considering early repayment of a mortgage.

Answer 1

• early redemption penalties?
• fixed or variable interest rate?
• amount of outstanding mortgage?
• any other loans? higher interest?
• any protection policies running alongside mortgage?

Question 2

Name 2 potential benefits of early mortgage repayment.

Answer 2

• more disposable income
• less risk of personal bankruptcy

Question 3

The repayment of a mortgage is a way of reducing what?

Answer 3

Investment risk

Question 4

If the mortgage interest rate was 5.99%, what gross return would be required for BRT payers (ignoring PSA).

Answer 4

5.99 / 0.8 = 7.49%

Unlikely to be achieved without some exposure to capital risk