Paying lump sum of AIB mortgage

martineire

I just wondering how much would my monthly mortgage repayments be reduced? The mortgage is a AIB house to let 25yr variable rate mortgage for the sum of €80000 there is currently €72000 left to pay. The house was valued at €175000 three years ago. The monthly repayments are €486. By paying a lump sum off it €15000. Can anyone be able to tell me what my monthly repayments will be then??

Thanks

chris85

martineire wrote: »

I just wondering how much would my monthly mortgage repayments be reduced? The mortgage is a AIB house to let 25yr variable rate mortgage for the sum of €80000 there is currently €72000 left to pay. The house was valued at €175000 three years ago. The monthly repayments are €486. By paying a lump sum off it €15000. Can anyone be able to tell me what my monthly repayments will be then??

Thanks

This would be dependant on the interest rate as well as the remaining term of the mortgage.

martineire

APR is 5.458% and 22yrs remaining on the mortgage

gordongekko

back of an envolope calc is around 380

dotsman

If you can afford the current repayment amount, the better option would be to have the lump sum knocked off the term. You'll save a lot more in the long run.

martineire

gordongekko wrote: »

back of an envolope calc is around 380

Can anyone tell me how that calculation is achieved from the details I gave because it was not to far off what I was quoted from AIB?

Also my mortgage is a buy-to-let variable mortgage is they anything I could change about my mortgage that would benefit me and bring down my monthly repayments? Because of my circumstance at the time I had to get a buy to let mortgage and as a result the APR is 5.458%

Thanks

D3PO

is the property actually a buy to let your last post is unclear sounds like its your own home but a BTL mortgage ? I ask because if so you need to do the maths in relation to the benefit of paying off a lump sum.

this brings down the monthly term yes but also reduces your interest relief benefit on your tax returns and also as the monthly repayments are less your profit goes up so again from an income tax perspective it hits you negatively.

obviously if its your own home, make sure every other credit agreement you may have is cleared first. I.e pointless paying a lump sum off your mortgage at 5 - 6 % if you owe a chunk on a Credit card at 18% plus etc.

martineire

D3PO wrote: »

is the property actually a buy to let your last post is unclear sounds like its your own home but a BTL mortgage ? I ask because if so you need to do the maths in relation to the benefit of paying off a lump sum.

this brings down the monthly term yes but also reduces your interest relief benefit on your tax returns and also as the monthly repayments are less your profit goes up so again from an income tax perspective it hits you negatively.

obviously if its your own home, make sure every other credit agreement you may have is cleared first. I.e pointless paying a lump sum off your mortgage at 5 - 6 % if you owe a chunk on a Credit card at 18% plus etc.

Yes that is right it's a buy-to-let mortgage and it is my own home (I'm living there). Yea every other credit agreement I have is cleared, I'm basically just saving up some money and paying it off the capital of the mortgage to bring down my monthly repayments.

Are theses mortgages front loaded at the start of the mortgage cause I seem to be paying mostly interest over the past few years of the mortgage (start of my mortgage) and not a much of the capital and if so when does it tend to turn the other way around?

Thanks

D3PO

martineire wrote: »

Yes that is right it's a buy-to-let mortgage and it is my own home (I'm living there). Yea every other credit agreement I have is cleared, I'm basically just saving up some money and paying it off the capital of the mortgage to bring down my monthly repayments.

Are theses mortgages front loaded at the start of the mortgage cause I seem to be paying mostly interest over the past few years of the mortgage (start of my mortgage) and not a much of the capital and if so when does it tend to turn the other way around?

Thanks

your better as already mentioned using the lump sum to bring the term down and not the monthly repayment in the long run its more effective for you.

re interest I know how you feel I felt the same with mine. It will gradually switch to more capital and less interest but will take time of course bringing down the term will expedite this.

martineire

But for it to gradually switch to more capital and less interest does the years coming down or the repayments coming down determine that switch? Because im thinking with the extra profit i will be making from my reduced monthly repayments combined with more savings ill have a nice little nest egg to pay of my capital in a couple of years again and then i can go again with even more profit from my reduced monthly repayments and so on. I will be able to chip away at the capital that way.

jhayden

Hi Martin,
The calculation is like this (I get a slightly different figure than Gordon) but this is the way I got them.

Formula : M = Pr(1+r)^N / [(1+r)^N- 1]


P = 57000 (72000 – 15000)

r = 0.004548 (5.458% /12)

N = 264 (22*12)

Putting the figures into the formula.


57000( 0.004548)(1.004548)^264 / [(1.004548)^264 – 1]

=> 259.236 * 3.313317/ [(3.313317-1)]

=> 858.93 / 2.313317

=> 371.29