Should I pay off a euro mortgage?

Harbour

I own a small house in Portugal with around 20K euros left on the mortgage. With the possible unravelling of the the euro zone, I am wondering if I should attempt to pay off the mortgage and keep cash banked in Portugal to the minimum. There are so many conflicting reports online of what might happen if Greece leaves the EU and how there might be capital flight from Portugal, Spain and Italy.

The mortgage repayments are small but paying off the mortgage would obviously deplete my capital reserves. I currently live overseas and might need to return to the UK in the coming years. If that happens then I'll need capital to try and buy a property there.

I have been advised to sit tight. If the worst happens and Portugal exits the eurozone, interest payments would go up but I'd be repaying in a depreciated currency.

I would appreciate any advice or other perspectives.

DVardysShadow

In your position I would be keeping cash banked in Portugal down to the minimum necessary to keep the mortgage in payment. If Portugal exits the Euro, this will be converted to the new local currency. If you have the money to pay off the mortgage and a choice of where to keep it, then I suggest you either keep it in a £ account in the UK or a € account in a core Euro area. If Portugal does leave the Euro, the loss of confidence in Portugal will probably take the new currency down from the initial conversion - and if interest rates go up in Portugal, you will have time to move your money in to pay off the mortgage.

Of course, ignore this suggestion if you disagree with the assumptions.

opinions4u

I agree.

If the Euro is going to crash you want debt in Euro's and savings in a stronger currency.

Then the effective size of your debt will reduce as the currency weakens / collapses.

It's all in the word if.