I’m 36 with only $45k left on my mortgage. Should I pay it off early?

I am 36 years old, working full-time, and I bought a unit in 2019.  I have been making additional mortgage repayments since purchase, and now have $45,000 remaining on my mortgage. Should I continue my current arrangements of adding $1500 per month on top of my mortgage repayment, or invest this money elsewhere and let my monthly mortgage repayments take care of the remaining balance? I would like to keep my mortgage open and have access to the savings in my redraw account ($200,000), but am unsure at what point to “put the brakes on” my intensive mortgage repayment plan and explore other options.

Nicely done getting your mortgage down so quickly. Given full clearance is within sight, I would push on, then invest, if it were me, especially given interest rates are back on the rise.

That said, I’m sure it would be possible to run a spreadsheet that showed a slight benefit to investing now. The thing is, future investment returns are unknowable. Now mortgage rates fluctuate too, but if you pay off your mortgage, you know for sure that you will save the interest expense.

Plus there’s the peace of mind and extra flexibility in life that you gain through being mortgage free, and that has real value, even if it doesn’t show up on a spreadsheet. I agree with your thinking with regards keeping the facility open so you can redraw. Much easier than having to apply for a new loan.

Once your mortgage is gone, you will be able to consider how best to reallocate the money currently devoted to that cause. Super top-ups, geared and un-geared investments, and perhaps a bump in your holiday budget!

I am set to receive an inheritance from my parent’s worth about $3 million. My wife and I, now in our 80s, have no debts and a comfortable state super pension. My plan is to give my four children most of the inheritance money. All but one of my children are renting. Are there any inherent problems with this plan?

None that I can see. Were you reliant on a Centrelink age pension, things would be different, but your defined benefit pension will not be impacted.

Australia has no estate or inheritance taxes, one of the few developed nations where this is the case. So there are no tax consequences for you or your children, assuming the inheritance is received as cash.

It would be worth a chat with your solicitor just to ensure your estate planning arrangements are all in order, but from what you have shared, your plan makes sense, and your gifts will I’m sure have a very meaningful impact on your children’s lives.

I am 81, retired, and have an SMSF in pension phase with approximately $1.2 million in shares and cash. To simplify my affairs as I age, I am considering winding up the SMSF and transferring the balance to a large superannuation fund. My plan would be to sell the assets, complete a final tax return and audit, and close the SMSF. Are there any issues with this approach, particularly any risk of losing my tax-free pension status?

Good idea. SMSF administration can become burdensome. And at some point in the future, your family and beneficiaries will be genuinely grateful that you have simplified things.

You will need to work with your fund’s accountant to ensure the transfer is documented correctly, but otherwise there is no problem rolling your super pension from SMSF into a mainstream fund.

Paul Benson is a Certified Financial Planner at Guidance Financial Services. He hosts the Financial Autonomy podcast. Questions to: paul@financialautonomy.com.au

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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