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Company Loan Type APR Est. Pmt.

sell or refinance

Posted on: 08th Nov, 2006 03:43 pm
kindly provide some advice on whether it will be a good idea to sell few of my investments to pay off my mortgage or rather go for a refinance.
If you ask me then it will be certainly a better option to go for the refinance if you are getting lower rates than your existing one instead of selling your investments.

Also the interest that you pay for the mortgage is tax deductible plus there are capital gain taxation considerations if you would be selling the investments.
Posted on: 08th Nov, 2006 03:51 pm
Hi Guest,

I think you need to consider the rate of return on your investment. The return on your investment may be higher than what you can save from a lower rate obtained in a refinance. You need to calculate the return and the savings in interest from the refinance. Compare the figures and if you find that the return is higher than the savings, well then, you need not sell the investments to pay off the loan. Instead, you should refinance in order to get out of the debt. But then make sure that you get a lower rate on the refinance.


Posted on: 08th Nov, 2006 10:37 pm
Hi Hughwayne,

Welcome to the forums.

The best way to manage your finances is to keep your second source of income, that is, the investments intact while you pay off the mortgage and make your home free of debt.

If you sell the investments, you will be losing a part of your income. Also, you need to pay capital gains taxes on the profit earned through the sale. On the other hand, if you get a lower rate, you can refinance and this may help you to deduct taxes equal to a certain part of the interest payments.

If you think, it is possible to carry on with the investment and loan payments, and then you should refinance the loan. You can make the monthly payments by using the return that you get on the investment. You will have to pay taxes on the return as it is regarded as an income. But then these taxes can be offset by the tax benefits you get by refinancing.

However, if you feel that you cannot manage your investments as well as the loan, then you better pay it off by selling the investments.


Posted on: 09th Nov, 2006 01:07 am
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