any advantage in paying off mortgage early

garred

Just briefly read this thread and can't understand the appartment bashing. Not all are bad builds. With regard to noise, well a terraced house would have just as much. Granted not as many joining builds but noisy neighbours are noisy neighbours not matter where you live (within reason).
Maintenance companies are getting a bashing but not all of them are bad. Remember maintenance fees, in most cases, cover block insurance, refuse collection, property and common areas upkeep, etc. If you apply these fees to a house (especially refuse and insurance) a big chunk of that fee would be used.
Personally I would love to live in a detached house with plenty of land but because of location and price thats not going to happen. My point being that apartments have been popular, are still popular and for the forseeable future with the amount going up, will be popular.

Actually sorry just read Zaphod's reply and he summed it up better than me.

MorningStar

Zaph0d wrote:

This is the point. Apartments are cheaper than houses in the same location. Everyone would prefer a house but not everyone can afford one. A 2-bed apartment often sells for less than the price of a pokey old 2-bed terraced house with no garden and dodgy wiring.

THe point there is desire as people get older they will more likely want to move out of an appartment. More demand for houses less for appartments.

Zaph0d wrote:

Apartments come with maintenance charges, but so do houses. As a house owner, morningstar must know that there are myriad charges each year etc... I don't see that apartment maintenance costs more than house maintenance.

Yes house have costs but a large building even broken down among many residents actually result in higher costs. Something wrong with your roof you can actually fix it yourself an appartment requires paying somebody each time. THe building needs to be painted same applies.

Zaph0d wrote:

What is the advantage to freehold over a long leasehold?

A leasehold can go up! Wait 10-15 years and you will hear stories of leaseholds being sold to companies that suddenly push up the land rent or claiming certain rights.

Zaph0d wrote:

Noise is a problem depending on insulation but many modern 3-beds have only a visual barrier between you and your neighbour. I've been in houses in Lucan where you can hear the nieighbours shagging and shouting, the TV and even the alarm clock.

Bad property everywhere is true but the differnce is the number of neighbours and possible noise sources. Some appartments have 4 direct neigbours combined with hall and road noise. A semi-d only has the road and one direct neighbour.

Zaph0d wrote:

Apartment blocks are often better insulated from road noise, mowers etc.

Mass is the only thing that stops noise. Appartments are built now with stud walls between them (I have not seen a house built like this).

Zaph0d wrote:

Is a high spec 3 bed apartment with some shared garden more expensive than a 3 bed house in the same location? I doubt it. Front gardens are fast becoming parking places in most estates and while the privacy of a rear garden is nice in the summer, most gardens are ignored for most of the year. I'd prefer to pay a fee for the use of a secluded shared garden, tended by someone else.

Two properties at the same high spec one an appartment and the the other a house which one is worth more? Most people want their own private space, most garden don't require much attention during the winter. I use my garden all year round. Don't know this but are you able to keep pets in appartments here? Would you keep a dog in an appartment?

Zaph0d wrote:

Granted, I have no idea why anyone would live in an apartment in an outer suburb with no local train/tram, but a large apartment somewhere like Dun Laoghaire looks pretty good to me.

Another thing that might cause the name of such property be further bad mouthed.
Many of the apprtments being built are not high spec or with good facilities. No where to park your car, bicycle, keep your rubbish, dry clothes or even plumb a wahing machine. You can see it from the balconies on these appartments.
Overall I am not hearing a lot of people saying they want to live in an appartment by choice but more out of need and cost.

As a general rule a house is preferable to most there are exceptions but mostly this is the case. It's not appartment basing as such more complints about bad planning, construction standards and lack or foresight for the future. I've said it before I think our current housing stock is not being used correctly and that is easier to address.

ambro25

homeOwner wrote:

Can you briefly explain how this account works - is it a savings account or a mortgage account? and which bank offers it. I am not familiar with it.

Here goes (have to do this post in several edits as browser keeps crashing on me - :mad: )

Example:
Your appartment is worth - €200k
Your mortgage - €100k
Your savings - €20k
Your monthly income -€5k

At time T0, 1st September 2005, the One Account is opened and the balance is:
minus €100k plus €20k plus €5k = minus €75k (your first bank statement is a scary thing to look at, LOL!)

The Account has a 'limit' (=overdraft facility of sorts), under which you are not allowed to 'fall'. This can be the value of your property. The limit 'ratchets' down each month, to 'prod' you to repay some of your mortgage, say €250 a month (remember- The One Account behaves like a current account, so you don't 'have' to pay off the mortgage so long as you're under the limit).

So, the overdraft limit (what you could write a cheque for) is in fact €200k minus €75k = €125k. But you won't write that cheque and buy a Ferrari (at mortgage rate, not consumer/bank loan rate, note), because you're good with money.

continued in further post -

ambro25

now, during the month of September 2005, you have two choices:

(i) you live off your One Account (groceries, petrol direct debits, etc.), everytime you pay something with it, the capital on which your interest is calculated (daily, pro-rata) increases.

So, say your 'living expenses' for Sept 05 all-in are €3k, spent at a rate of €600 per week. Mortage interest is payable on:
minus €75k minus €600 after week 1 = minus €75,6k
minus €75,6k minus €600 after week 2 = minus €76,2k
minus €76,8k minus €600 after week 1 = minus €76,8k
etc.

OR

(ii) you live off your credit card all month and pay it in full at month end = no CC interests (draw cash from One Account, obviously).

So, say your 'living expenses' for Sept 05 all-in are €3k, spent at a rate of €600 per week. Mortage interest is payable on minus 75k all month long = less interest to pay.

If you're really disciplined with money, go with (ii).

With me so far? Good, on we go -

At time T1, 1st October 2005, you've been paid, and paid your CC bill, and the One Account balance is:
minus €75k plus €5k (pay) minus €3k (CC bill) minus mortgage interests on €75k (say €250) = minus €73,250

The Account 'limit' has ratcheted by €250 and is now €200k - €250 = €199,750

Mortage interest is now payable on minus 73,250 all month long = even less interest to pay.

and so on and so forth...

Easy, once you know how

homeOwner

Wow! Thanks ambro25. That is the best explaination in plain english of a financial matter I have ever seen.

You should work for one of the banks! (on second thought they may not want you explaining so well!)

Do they calculate the interest at the same rate as a regular mortgage or are their rates higher for this type of account? Sounds like a good way to reduce the mortage repayments but still pay off the princple.

MorningStar

ambro25 wrote:

(ii) you live off your credit card all month and pay it in full at month end = no CC interests (draw cash from One Account, obviously).

That is a really good option I had never thought of before. Well put too.
As one of those people who always pay off my card it is great option.

On another point the idea of a one account doesn't need to be just actually 1 account. First active allow you have 6 AFAIK.
Here is a calculator by the by

http://www.firstactive.ie/calculator_cam.asp

ambro25

homeOwner wrote:

Do they calculate the interest at the same rate as a regular mortgage or are their rates higher for this type of account? Sounds like a good way to reduce the mortage repayments but still pay off the princple.

It's (usually) a variable interest rate, so... hard to tell. I used to have one in the UK with Yorkshire Bank, and the interest rate was comparable (plus/minus 0.3% of an 'average').

The beauty of this system is that you don't have to 'think' about early repayment, or make a big cash injection into your mortgage and how to go about it and will you be penalised and whatnot: just pay the cash/cheque from the Lottery or Bet winnings in your One Account and hey presto, capital on which interest is calculated is reduced by that much.

And once you get 'into the green'... end of the mortgage, no early repayment fees or procedure or such administrative bother like that - the OA converts into a standard current account and the bank gives you your deeds, end of the story (well, at least that's how it worked with YB).

Another way of using it (parallel thinking cap on ) is -even if you can pay it in full at some stage- to maintain it as a OA and keep a wide gap between the OA 'limit' and the balance (as in my example, a €120-odd thousand Euros) and use that gap for 'big borrowing' at mortgage rate (instead of CC or consumer loan rate). Useful for cars, home improvements, etc, etc.

Bosco

As regards the 'One' account type products I think these are best suited to those who want the flexibility of being able to get at that cash at a whim. In terms of reducing your overall debt these products will never be as good as simply giving the bank their money back.

As I see it the only thing better than paying off debt early is investing in something that gives a very high rate of return. As all high-return investments are risky to one degree or another it comes down to a choice between a gamble in the hope of big gains through investment or the security of an improvement in spending power as soon as you get the mortgage paid off. Investing might seem a lot less risky when the money you're using is truely yours and not the bank's.

Are you a gambling man homeOwner?