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How to pay down the mortgage?

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  • 15-06-2014 11:12am
    #1
    Chipman2007
    Registered Users Posts: 10 ✭


    So. Having a look now at mortgage move with Ulster Bank.

    We are going to keep our existing mortgage level circa 400k and move to a 5 year tracker at +2% followed up by 10 years at a variable rate.

    What is best pay down option?

    Do we pay an enhanced level now on the tracker and then renegotiate in 5 years or save what we could use to pay for the tracker and add it as a lump sum in 5 years?


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    #2
    AlmightyCushion
    Moderators, Education Moderators, Technology & Internet Moderators Posts: 35,056 Mod ✭✭✭✭AlmightyCushion


    If the interest you will earn in a savings account is more (after dirt) than you are paying on your mortgage then stick any extra money you have in that account instead of paying down the mortgage. Otherwise pay off the mortgage when you have the money.


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    #3
    Silpac
    Registered Users Posts: 51 ✭✭Silpac


    Chipman2007 wrote: »
    So. Having a look now at mortgage move with Ulster Bank.

    We are going to keep our existing mortgage level circa 400k and move to a 5 year tracker at +2% followed up by 10 years at a variable rate.

    What is best pay down option?

    Do we pay an enhanced level now on the tracker and then renegotiate in 5 years or save what we could use to pay for the tracker and add it as a lump sum in 5 years?

    Why pay 2% premium for a tracker for 5yrs ? it gives you no value rates can't possibly be 2% higher in 5yrs. Let alone they would need to be up significantly more than 2% at the end of the term to give value as you would be clearly paying more in the immediate term than market ie the 2% premium.

    All best are off at the end of the term...save your premium in a Post office account it will give you more value.


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    #4
    ardmacha
    Registered Users Posts: 7,476 ✭✭✭ardmacha


    Find out how they calculate interest on the mortgage and what the exact effect of an overpayment will be. Sometimes
    this will only be effective at a certain time of year, in which case open a regular saver account (these often limit the amount you can save) and make payments to the mortgage periodically.


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