Increase Mortgage Payments or Invest, increase Pension?

I Need The Sun

Hi all, in line with forum guidelines. I'm not looking for specific advice, however, I've bitten the bullet and decided to cease private medical insurance, but would like to re-invest this elsewhere.

So I've about €150 per month to invest.

Increase Mortgage Payments or Invest, increase Pension? etc

I know if I pick up the phone to a bank they're going to try to sell me anything that they have.

I'm tending to think that I might be best paying more off the mortgage, as I was told recently, that on a average mortgage, an addional payment of about€100 a month can reduce the average mortgage by about 5 years...

I know that they are real vague figures, but just looking for some general second opinions...thanks

chris85

I Need The Sun wrote: »

Hi all, in line with forum guidelines. I'm not looking for specific advice, however, I've bitten the bullet and decided to cease private medical insurance, but would like to re-invest this elsewhere.

So I've about €150 per month to invest.

Increase Mortgage Payments or Invest, increase Pension? etc

I know if I pick up the phone to a bank they're going to try to sell me anything that they have.

I'm tending to think that I might be best paying more off the mortgage, as I was told recently, that on a average mortgage, an addional payment of about€100 a month can reduce the average mortgage by about 5 years...

I know that they are real vague figures, but just looking for some general second opinions...thanks

put it where the best rate is. If you can get a deposit rate better than your mortgage rates, factoring in DIRT, then save it at the better rates.

I Need The Sun

Thanks Chris,

Does the paying of the "mortgage quicker" make any sense?

I've heard it has something to do with the amount that is paid off the amount owed, therefore reducing the amount of total interest that was expected to be paid over the total term of the loan. (???)

But I cant really get my head around the maths. But some of my friends swear by it.

Cheers

chris85

I Need The Sun wrote: »

Thanks Chris,

Does the paying of the "mortgage quicker" make any sense?

I've heard it has something to do with the amount that is paid off the amount owed, therefore reducing the amount of total interest that was expected to be paid over the total term of the loan. (???)

But I cant really get my head around the maths. But some of my friends swear by it.

Cheers

I understand but still comes down to the rate. If you knock €150 per month off the mortgage you are saving paying €150 each month at the mortgage APR (call it X%). So if you can get a loan rate at Y% which is better than X% than it is better to save at Y% than you are better to save at the higher rate.

You will clear a mortgage quicker by overpaying but you are better if you can save at a higher rate and then use the savings to clear the mortgage. If you can save at a higher rate then setup a seperate account for this €150 each month and get the better rate and at the end of each year use the money and lump it off the mortgage.

Dont forget to factor in DIRT on the savings rate.

Also if you are on a fixed rate mortgage at present, there will be penalties for increase payments. This is not the case for variable/trackers. No penalties at all for ad hoc over payments for these products.

I dont know much about pensions myself so others may advise you better on them but you must be careful choosing a pension product.

I Need The Sun

Thanks Chris, much appreciated...