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Pay mortgage with savings?

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  • 12-01-2012 2:06am
    #1
    D1stant
    Registered Users Posts: 1,806 ✭✭✭


    Mortgage = 3x. Savings = x

    In the light of Euro risk, is it better to pay off 1/3 of mortgage of leave money as is (presuming interest/savings rate parity)


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    #2
    The_Honeybadger
    Registered Users Posts: 4,155 ✭✭✭The_Honeybadger


    D1stant wrote: »
    Mortgage = 3x. Savings = x

    In the light of Euro risk, is it better to pay off 1/3 of mortgage of leave money as is (presuming interest/savings rate parity)
    Nobody can answer that except yourself, there are all kinds of factors to consider here, what if you need the money in an emergency for example. Nobody knows what will happen with the euro yet, so I wouldn't think a thread like this will give you any answers. Many would kill to have that headache, lucky you.

    Hope this helps :D


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    #3
    MadsL
    Registered Users Posts: 20,299 ✭✭✭✭MadsL


    A better set of figures would be Mortgage x% Interest, Savings x% yield.

    So if you are paying 8% interest on your mortgage but only get 4% yield on your savings/investments...
    You also need to factor inflation rate....


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    #4
    evolving_doors
    Closed Accounts Posts: 11,812 ✭✭✭✭evolving_doors


    Do you wanna move soon?
    Do you wanna stay for long?
    Trade up?
    Trade down?
    Are you single?
    Do you have a family?
    Do you have family plans for the future?
    Do you have a guaranteed income?
    Are you close to retirement?
    Are you starting out on the mortgage?
    How long is the mortgage?
    What rate is the mortgage at?
    Have you considered extending the property?
    Have you considered purchasing a cheap property and renting out your current house?
    Are you being chased by the revenue for a large outstanding amount?
    Have you considered wind energy investments?

    If it's solely based on euro worries then putting money into something solid like a house might be a good idea,( I think Eddie Hobbs has bought all the gold anyway).


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    #5
    mark5
    Closed Accounts Posts: 14 ✭mark5


    don't be silly give them nothing


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    #6
    Cookie_Monster
    Registered Users Posts: 24,479 ✭✭✭✭Cookie_Monster


    mark5 wrote: »
    don't be silly give them nothing

    :rolleyes:

    he has to pay the loan back anyway, why not pay a part of it off in one go and save lots of interest in the long term.

    OP if you have no plans for the savings why not pay into the mortgage, not all though, always good to have some savings for unexpected events. It's not like deposit interest is any good these days.

    Bear in mind you may lose certain terms on the mortgage by paying lump sums, make sure you check the mortgage contract fully before doing anything.


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    #7
    Nijmegen
    Registered Users Posts: 3,086 ✭✭✭Nijmegen


    Well, are you struggling to pay your mortgage today? If so, think about long term viability of it even after you've paid off 1/3

    If not, perhaps keep your nest egg.

    Hard for Boards to offer financial advice, though.


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    #8
    Armin_Tamzarian
    Closed Accounts Posts: 10,833 ✭✭✭✭Armin_Tamzarian


    D1stant wrote: »
    Mortgage = 3x. Savings = x

    In the light of Euro risk, is it better to pay off 1/3 of mortgage of leave money as is (presuming interest/savings rate parity)

    Would the "Euro risk" have any effect though.
    If you have an Irish mortgage and an Irish savings account then both would be converted to the new currency at the same rate.
    You'd still have savings equal to 1/3 of your mortgage.

    I have an offset mortgage myself.
    I guess it has the same effect as paying off a chunk of the mortgage but I have ready access to my savings if I need them.


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    #9
    RichardAnd
    Registered Users Posts: 3,630 ✭✭✭RichardAnd


    OP, only you can decide what you should do with your savings. However, I personally would not use all of my savings to pay off a mere fraction of a debt. If I did, I would have no emergency funds and I would still have a large debt to pay off.

    If the euro did indeed fall apart, it would likely bring up situations wherein the "normal" rules of finance cease to apply. Keep watching and keep alert.


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    #10
    D1stant
    Registered Users Posts: 1,806 ✭✭✭D1stant


    Armin_Tamzarian wrote: »
    Would the "Euro risk" have any effect though.
    If you have an Irish mortgage and an Irish savings account then both would be converted to the new currency at the same rate.
    You'd still have savings equal to 1/3 of your mortgage.
    QUOTE]

    Thats really my question. You 100% sure on that. I hear people saying that devaulation on Euro exit would affect savings but have not heard anyone say what the impact on mortgages might be

    The mortgage is new. Variable over 20 years so I am paying mostly interest now

    I have other equity if I need to get it


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    #11
    Armin_Tamzarian
    Closed Accounts Posts: 10,833 ✭✭✭✭Armin_Tamzarian


    D1stant wrote: »
    Armin_Tamzarian wrote: »
    Would the "Euro risk" have any effect though.
    If you have an Irish mortgage and an Irish savings account then both would be converted to the new currency at the same rate.
    You'd still have savings equal to 1/3 of your mortgage.
    QUOTE]

    Thats really my question. You 100% sure on that. I hear people saying that devaulation on Euro exit would affect savings but have not heard anyone say what the impact on mortgages might be

    The mortgage is new. Variable over 20 years so I am paying mostly interest now

    I have other equity if I need to get it

    I'd be wary of taking anything said by me or anyone else here as 100%.

    My opinion would be though that if I had say a mortgage and a savings account with AIB that if a new currency was introduced then both would be converted into new currency.

    I so feel a bit safer keeping my savings and mortgage with the one bank.

    Talk to your bank I guess.


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    #12
    D1stant
    Registered Users Posts: 1,806 ✭✭✭D1stant


    Armin_Tamzarian wrote: »
    D1stant wrote: »

    I'd be wary of taking anything said by me or anyone else here as 100%.

    My opinion would be though that if I had say a mortgage and a savings account with AIB that if a new currency was introduced then both would be converted into new currency.

    I so feel a bit safer keeping my savings and mortgage with the one bank.

    Talk to your bank I guess.

    I would If I trusted the bank. The bank will advise to pay the mortgage lump sum if they think my prospects are risky, and not to if they think I am a sure bet and therfore extract more interest from me in the long run


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