Mortgage lump sum pay off

noddyk

Hi ,

I have one year done on a 3 year fixed rate mortgage.

It is a 30 yr mortgage of 179k.

I wish to pay a lump sum off of 10k.

Would I be best off waiting until the 3 years are up?


Does it make much difference?

Nod

Chris_5339762

Yes. Most banks charge ridiculous fees for overpaying while you're in a fixed term. It won't be worth it.

Bank the money, and overpay it once your three years are over.

Trish56

noddyk wrote: »

Hi ,

I have one year done on a 3 year fixed rate mortgage.

It is a 30 yr mortgage of 179k.

I wish to pay a lump sum off of 10k.

Would I be best off waiting until the 3 years are up?


Does it make much difference?

Nod

Depends on who you have the mortgage with as KBC allow you to pay 10% of the principal during a fixed rate term. Need to check with your lender to see if you will pay a penalty by paying off the 10k otherwise your best putting it in a savings account until the fixed term is up.

noddyk

Trish56 wrote: »

Depends on who you have the mortgage with as KBC allow you to pay 10% of the principal during a fixed rate term. Need to check with your lender to see if you will pay a penalty by paying off the 10k otherwise your best putting it in a savings account until the fixed term is up.

thanks for that lads. I will arrange an appointment with the bank.

what sort of penalties generally would we be talking about? hundreds? thousands?

TheBody

Nice little calculator here that will help you find out how much the lump sum payment will mean to you.

http://www.consumerhelp.ie/extra-repayments-calculator

josihay35x

Hi. Sorry to jump this thread, but hoping someone here can explain.

I just paid off a lump sum of my mortgage (20k), and also increased my monthly repayments so im overpaying by about 30%.

I was hoping my mortgage duration would decrease . . .obviously.

Got a mortgage statement in post today, and despite the lump sum payment, and increased repayments, the maturity date is still the same.

Anyone know what's the story here like!!??!! 😡

corglass

josihay35x wrote: »

Hi. Sorry to jump this thread, but hoping someone here can explain.

I just paid off a lump sum of my mortgage (20k), and also increased my monthly repayments so im overpaying by about 30%.

I was hoping my mortgage duration would decrease . . .obviously.

Got a mortgage statement in post today, and despite the lump sum payment, and increased repayments, the maturity date is still the same.

Anyone know what's the story here like!!??!! 😡

The bank did their default move and kept the term the same and simply reduced your ongoing monthly amount to match.

You need to request (in writing) for the monthly payments to be increased permanently to 130% of original and term reduced accordingly.

Merowig

corglass wrote: »

You need to request (in writing) for the monthly payments to be increased permanently to 130% of original and term reduced accordingly.

I wouldn't do this in as there wouldn't be a guarantee you can reduce your payments at a later point then because you can't afford the overpayment any longer. I would just continue to overpay - the term would reduce automatically as you clear of the loan earlier in any case.

corglass

Merowig wrote: »

I wouldn't do this in as there wouldn't be a guarantee you can reduce your payments at a later point then because you can't afford the overpayment any longer. I would just continue to overpay - the term would reduce automatically as you clear of the loan earlier in any case.

Poor advice. Overpaying typically results in the funds residing in a holding account until the bank is instructed to remove the additional money off the principle. The principle amount is incurring interest during this period. The bank do this intentionally as it benefits them.

A bank has already factored in the original payment and term when the mortgage was approved so they'll be no issue reverting to the lower amount later on.

josihay35x

corglass wrote: »

Poor advice. Overpaying typically results in the funds residing in a holding account until the bank is instructed to remove the additional money off the principle. The principle amount is incurring interest during this period. The bank do this intentionally as it benefits them.

A bank has already factored in the original payment and term when the mortgage was approved so they'll be no issue reverting to the lower amount later on.

thaks for that.

So, if i write to them to ensure the lump-sum and permanent overpayment is off the principle, should the bank be able to give me a revised statement , showing earlier maturity date?

brianomc

With AIB I have my mortgage account setup on my online banking, I can make payment straight away and see the balance reduced. I then get a letter in the post about 2 weeks later acknowledging the payment on the date I made it along with the new monthly repayment figure.

When I used to send in the letter stating that I wanted to repay some then it did take a few weeks for the money to leave my account and get knocked off the mortgage balance. I believe that to reduce the term instead of the monthly payment then sending in the letter is the only option. But best to check with your bank.