QUESTION:

I'm 43, my wife is 37 and we have a 5-year-old daughter. We owe $400,000 on our house which is worth about $550,000. We own both our cars and have no other loans but in April this year I will be made redundant from my job of 27 years and will be getting a payout of about $250,000. Pending finding a job we were just wondering whether to buy into an investment property or invest the money into shares or put it into the mortgage. What's our best strategy? Any help would be greatly appreciated.

ANSWER:

If you are being made redundant it is important to remain as flexible as possible. While I have no great objection to your paying the money off your mortgage, a better strategy would be to place into an offset account. This will create the same savings in interest, but allow the funds available to be withdrawn if necessary. If investment property is your "thing" you should be borrowing to the maximum and it may well be impossible to get a loan if you are unemployed. The offset account is the perfect solution while you are getting a new career together.