Say you were given enough cash to clear your mortgage, would you do it or keep it?

whomitconcerns

A thread in legal discussion this morning made me wonder about the below.

So you bought a house at top of Boom and got a mortgage of 400k

House is now worth 150k and you have 200k outstanding on mortgage remaining.

If you were given a payment of 200k, would you clear it off?

As someone who is not in that position it seems like a no brainer for me but to pay it off. But I feel others may differ on that opinion hence the poll?

Sir Arthur Daley

Vegas no brainer.

Reformed Character

Pay it off and move on with your life.

anncoates

Pay off mortgage. You're saving yourself a fortune in interest.

doolox

...on if the bank could follow you for the mortgage if they forced sale of the house and got a low price for it that did not cover the full costs and then came after you for the shortfall.

In some jurisdictions the bank can only sell the house and cannot pursue you for the shortfall if any. But in Ireland I think you are still liable for any shortfall on the sale of a house and the banks can pursue for that.

December2012

It's the cheapest money you'll ever borrow.

So if you can earn more by saving it I'd do that.

Rachiee

I would definitely pay it off that way instead of being rich for little while you'll be better off for the rest of your life. it would like getting a cash prize versus a pay rise off 1000 euro per month for the next 25 years.its definitely a better deal one other thing you could do though is nearly pay it off but keep some for a nice car and holiday thereby reducing your monthly repayment with a promise you'll have it paid off soon and still get to treat yourself.

The Backwards Man

I'd pay 100k off it and take the pressure off a bit.

enda1

I'd definitely invest the €200k on the markets. It's very foolish to have most of your net worth tied up in one asset class and even more foolish to have it tied up in one market.

xabi

Depends on your borrowing rate, if you could get a better rate saving it then save until the borrowing rate goes above saving rate, then clear it.

Witchie

I would pay off 150k and use 50k to buy a bolt hole in canaries or somewhere. Wait for the market to rise in my area and sell my house, pay off remainder of mortgage, buy a smaller house at home mortgage free and enjoy my life more.

So where do I sign up for this free money?

Caliden

Clear it, put 75% of what the mortgage payment was into savings or alternatively increase your pension payment so it's invested in the markets (depending on pension plan).


After 10-15 years you would have a nice little nest egg.

Boombastic

i'd give it to the wife and it'd probably slip my mind

I'd pay it all off but not before negotiating down the amount to be paid.

Then I can start planning travelling around the world indefinitely without having to worry about meeting the monthly mortgage payments.

gramar

Pay it off. It might cost you say 100k now but you might be paying 150k over the next 10 or 15 years or whatever the term is, so you save 50k.

You don't have a lump sum but you have your monthly mortgage payment in your back pocket. Having that increase in disposable income every month might mean people would spend it more wisely than getting a big lump sum and blowing it as is often the case.

Another factor is the sense of liberty of living in a mortgage free home. I don't see the mortgage as a noose around my neck but for some people there would be certain relief in paying it off and being done with it.

Barely There

Strawberry Milkshake wrote: »

I'd pay it all off but not before negotiating down the amount to be paid.

Then I can start planning travelling around the world indefinitely without having to worry about meeting the monthly mortgage payments.

Hello Mr Bank Manager, I'd like to pay off my mortgage please.

Certainly that will be €200k.

How about I give you €100K and we call it quits?

No, it's €200K.

Ok, here you go.

the_syco

Check if the €200k includes interest, and how less I end up paying by doing so in a lump sum. If I don't save anything, query why not. Better the loose change is in my pocket than theirs.

Mortgage free house means should I lose my job, I still have a roof over my head.

Linka

Pay it all off in one go. No use living it up only to still have that debt hanging over you when it's all spent.

Ray Palmer

I think some people don't get how finance can work to your advantage.

It may well be better to buy another property with a rental income that will pay of your mortgage.

Personally my tracker is worth a lot of money and it is possible to have a guaranteed income from a rental property. You can also take time off work with your tax free allowance being used against your rental income. To an extent that means you get paid when you aren't working.

Each to their own.

Cee-Jay-Cee

I would pay 100% of the mortgage immediately. I'd be saving €1100 a month which would leave me comfortably off for the test of my life. It's a no brainier.

Shiraz 4.99

People will rabbit on about how you'd be mad to pay it off as the interest paid on the loan is less than the interest you receive on deposit.

These people bore me to death cause the day I pay my mortgage is going to be one of the happiest days of my life.

Linka

Ray Palmer wrote: »

It may well be better to buy another property with a rental income that will pay of your mortgage.

Have you considered that some people don't wish to become landlords? That doesn't come without it's hitches, headaches and legal wrangles.

Wicklowrider

I was lucky enough to sell my share in a business that was doing well back in the the late '90's. Walked into the bank and done away with the mortgage and it was probably the best thing I ever done. Now my family have a roof over their heads no matter what - and having been seriously ill I appreciate the importance of that. I may not be clever, educated or well off - but I have a pot to piss in and 3 squares a day and that will do me

Sleepy

Depends on whether I'd a tracker on the boom time mortgage or not but most likely at least half would go into other investments

donegal__road

It would actually cost you a lot of money to pay off your mortgage. The banks would be looking for the interest on the money as well.

jimgoose

I'd bung about half at the mortgage to put manners on it, and keep the rest just ta have loadsamoney!!!

Sleepy

donegal__road wrote: »

It would actually cost you a lot of money to pay off your mortgage. The banks would be looking for the interest on the money as well.

I seem to remember that being made illegal over a decade ago...

JONJO THE MISER

Paying it off makes no sense whatsoever, take the 200k invest in markets and you should be able to make 7-10% per year, use that to keep paying off your mortgage and making a little on the side, when your mortgage is payed off you still will have your 200k in liquid cash no tied up in a house.

donegal__road

Sleepy wrote: »

I seem to remember that being made illegal over a decade ago...

well a couple of years ago, we renegotiated our mortgage repayments so we could overpay on the mortgage. The bank told us that normally they wouldn't allow a borrower to make repayments of the amount that we wanted to, but we could do it for a year. By the way the amount we were overpaying by was not huge.

I dont know what the story would be by paying off the principal in one go.

Antar Bolaeisk

Is there a fee for paying off a mortgage early or for paying a lump sum towards the mortgage?

I know I'm in a position to pay mine off now but I won't simply because the money is worth more in the various accounts that then interest I'd save myself from having to pay.

donegal__road

Antar Bolaeisk wrote: »

Is there a fee for paying off a mortgage early or for paying a lump sum towards the mortgage?

I know I'm in a position to pay mine off now but I won't simply because the money is worth more in the various accounts that then interest I'd save myself from having to pay.

I just looked this up..

http://www.consumerhelp.ie/extra-mortgage-payments

Ray Palmer

Linka wrote: »

Have you considered that some people don't wish to become landlords? That doesn't come without it's hitches, headaches and legal wrangles.

Agreed but you can sign up for RAS and you don't have to do anything. The income is guaranteed as is the maintenance.

The hitch is it doesn't pay the same level of rent.

You would be doing a public serves too as so many people have pulled out of the scheme while demand has increased.

Ray Palmer

CJC999 wrote: »

I would pay 100% of the mortgage immediately. I'd be saving €1100 a month which would leave me comfortably off for the test of my life. It's a no brainier.

A no brainer in that it would not be the best use and you could get more out of it.

People ever wonder why the rich get richer, they use their money and assets wisely.