Paying more off your mortgage

helimachoptor

Probably a stupid question.. but if I want to start paying more off my mortgage is it as simple as just transferring money into the mortgage account?

bada_bing

yep as far as i know , only if you're on variable rate or tracker mortgage. If you are on a fixed rate then you cannot pay more off your mortgage. When i was renting a room from someone last year, he told me to set up a monthly direct debit where my rent was paid to his mortgage account.

helimachoptor

bada_bing wrote: »

yep as far as i know , only if you're on variable rate or tracker mortgage. If you are on a fixed rate then you cannot pay more off your mortgage. When i was renting a room from someone last year, he told me to set up a monthly direct debit where my rent was paid to his mortgage account.

Cheers, yep its a tracker

homer911

bada_bing wrote: »

yep as far as i know , only if you're on variable rate or tracker mortgage. If you are on a fixed rate then you cannot pay more off your mortgage. When i was renting a room from someone last year, he told me to set up a monthly direct debit where my rent was paid to his mortgage account.

I note the OP has a variable rate mortgage, but, as far as I am aware, you can increase payments on a Fixed Rate Mortgage, but the interest will be calculated on the theoretical balance, not the actual balance.

As an alternative, you could lodge money into a savings account until the end of the fixed rate period, then transfer it to the mortgage - you would then be saving more by earning some interest on the savings in the mean time

Sum Sea

With mortgage tracker rates so low (approx 2%) you could put the amount into a regular savings account and earn approx 4% after DIRT, at least until the mortgage rate is greater than regular saver accounts

See itsyourmoney.ie (but be aware of the conditions)

dobsdave

Make sure to actually tell your lender that any extra payment they receive from you is to go off the loan.
Otherwise the lender (usually) will presume you are just paying the next month(s) payment and your money will sit there doing nothing for you.

CFC95

We are on a fixed rate (5%) with BOI until the New Year with 33 years left on a €285K mortgage after that. We've recently had a windfall of €50K. Any advice on the best thing to do, i.e. pay off a lump sum or increase monthly payments?

I would imagine BOI would love to get their hands on €50K and would offer a good deal, especially if we threatened to switch lenders?

fasterkitten

CFC95 wrote: »

We are on a fixed rate (5%) with BOI until the New Year with 33 years left on a €285K mortgage after that. We've recently had a windfall of €50K. Any advice on the best thing to do, i.e. pay off a lump sum or increase monthly payments?

I would imagine BOI would love to get their hands on €50K and would offer a good deal, especially if we threatened to switch lenders?

They'd probably jump at the chance.....to have you move lenders. It would be difficult to get another lender and they know that.

broker2008

dobsdave wrote: »

Make sure to actually tell your lender that any extra payment they receive from you is to go off the loan.
Otherwise the lender (usually) will presume you are just paying the next month(s) payment and your money will sit there doing nothing for you.

This is very important. I know of someone who had €4,500 sitting in oblivion because they never stipulated in what way the money was to be applied.

stepbar

If you want to overpay your mortgage you must notify the bank. Every mortgage payment is lodged into a suspence account. The same / next day every payment is matched off using the mortgage reference number associated with the payment. It's probably not worth your while overpaying whilst on a fixed rate. I would just put that money aside and once the fix period is up, use the saved balance to pay down the mortgage.

esharknz

We wrote a letter to the bank (AIB) in order to increase payments, specifying what we wanted to pay. We are on a tracker, like you (actually taken out by OH before I came on the scene). May differ by bank.

We are saving into a few high interest savings accounts as well, so we are very fortunate.

NinjaTruncs

esharknz wrote: »

We wrote a letter to the bank (AIB) in order to increase payments, specifying what we wanted to pay. We are on a tracker, like you (actually taken out by OH before I came on the scene). May differ by bank.

We are saving into a few high interest savings accounts as well, so we are very fortunate.

With BOI and were told we needed to write a letter to increase our repayment, we just said we wanted to pay X smount until further notice. Also if you want to pay a lump sum you need to let them know, the easiest way is to go into your branch and ask to transfer an amount into the mortgage, the guy i spoke to done all the paperwork and i just signed.

esharknz what rates did you get and what are the conditions? I'm looking for some good savings rates at the moment but not sure where to look.

seamus

Some banks will let you overpay on a fixed-rate mortgage, but only up to a certain limit.

For CFC with his windfall, I would stick it in a 6-month deposit account (if such a thing exists). When it matures, you'll be on a variable rate mortgage. Take your lump sum out and throw every single penny of it against your mortgage. Then renegotiate the terms of your mortgage - my fixed rate ends in Jan 2010 too, so my plan is to drop my term to 20 or 25 years (depending on the rates) and fix for another 3 years. Interest rates are going to start rising again as the worldwide recession lifts, so if you manage to score a 3.5% or 4% fixed rate mortgage you'll be laughing come 2011.

esharknz

NinjaTruncs wrote: »

With BOI and were told we needed to write a letter to increase our repayment, we just said we wanted to pay X smount until further notice. Also if you want to pay a lump sum you need to let them know, the easiest way is to go into your branch and ask to transfer an amount into the mortgage, the guy i spoke to done all the paperwork and i just signed.

esharknz what rates did you get and what are the conditions? I'm looking for some good savings rates at the moment but not sure where to look.

We've just got the standard savings ones with AIB. One allows you to save up to €1K per month (rates have come down in recent times, as expected) and another that means you can save up to €300 per month. Rates looked good when we took these out, but I don't know what they are now.