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Mortgage: Reduce amount or time?

  • 18-11-2007 5:32pm
    #1
    Andrea B.
    Registered Users, Registered Users 2 Posts: 1,988 ✭✭✭


    Would appreciate some opinions pros/cons or pointers to another thread with same discussion.

    Couple late 30's. Self employed, no real pension. 15 years variable interest mortgage left with 80k to pay.

    Would we be wiser to pay the odd irregular extra few euro that comes in to reduce the sum or the time period? We were veering towards reducing the time period, but would really like to know if there are any potential pitfalls.

    Many thanks.


Comments

  • #2
    cazzy
    Closed Accounts Posts: 1,027 ✭✭✭cazzy


    80k is a small enough mortgage. Id be more worried bout having no pension. If you're late 30's should you not be thinking of putting any extra into a pension ? Its got tax benefits as well.


  • #3
    TheDriver
    Registered Users, Registered Users 2 Posts: 12,680 ✭✭✭✭TheDriver


    pension, definitely. 80k Mortgage is pittens to be honest, put yourself on a low LTV tracker such as AIB and start on the pension, it is vital for your future.


  • #4
    Zaph
    Registered Users, Subscribers, Registered Users 2 Posts: 47,351 ✭✭✭✭Zaph


    Gotta agree, I can't believe that in this day and age a person in their late 30s wouldn't have a proper pension. My father was self-employed much of his life and never had a pension, it wasn't something that was much of an issue then, but he's seriously regretting now. Pile as much into it as soon as you can, the mortgage has been taking care of itself up to now and 80k over 15 years isn't going to break the bank.


  • #5
    homer911
    Registered Users, Registered Users 2 Posts: 5,150 ✭✭✭homer911


    If your mortgage is with a Building Society, it was once the case (and may still be) that interest is calculated based on the balance at the start of the year, regardless of when payments are made. Back in the 80's I saved considerable interest on my mortgage with the EBS by making "advanced repayments" immediately prior to the end of year, and then taking a repayment holiday. (Sometimes they tried to take this as a lump sum off the principal and I had to be clear this was not the case). The balance at the end of the year was then significantly lower, resulting in a lower interest charge for the following year - If your mortgage is with a Building Society, check to see if they still calculate interest this way. If with a bank, I'm afraid they use the daily balance basis


  • #6
    Andrea B.
    Registered Users, Registered Users 2 Posts: 1,988 ✭✭✭Andrea B.


    Thanks to everyone. Great feedback. Homer911, it is with a bank, but thanks anyway.


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  • #7
    ircoha
    Closed Accounts Posts: 2,290 ✭✭✭ircoha


    Andrea B. wrote: »
    Would appreciate some opinions pros/cons or pointers to another thread with same discussion.

    Couple late 30's. Self employed, no real pension. 15 years variable interest mortgage left with 80k to pay.

    Would we be wiser to pay the odd irregular extra few euro that comes in to reduce the sum or the time period? We were veering towards reducing the time period, but would really like to know if there are any potential pitfalls.

    Many thanks.

    Not quite sure how the period can be reduced by irregular payments.

    To reduce the term of a mortgage will require amending paperwork that will need to be signed by the borrower so the irregular payments will be used to reduce the principal.


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