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Do you overpay your mortgage?

[Deleted User]

Supposed to be do you overpay... (assuming you have a mortgage, of course).

Massive loans, generally costing at least a hundred grand each in interest alone. I pour every spare cent I can into mine (albeit, my plan is to eventually move elsewhere).

I know one other person who overpays their mortgage by €60 per month. I think the bank let them overpay by €60 on their fixed rate term, so they just keep fixing for 5 years and overpay the €60 each month.

However, almost everyone else I know pays the minimum required, and ignores it, with the attitude being that "sure it's there forever anyway" or "it'll be gone when I'm retired". They couldn't care less if they were paying 3 times the mortgage cost in interest. They know the monthly figure and they're happy to stick with it that way.

Do you bother overpaying? Or do you care at all?

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begbysback

I does be doing overpaying all the time

murpho999

I've always thought ploughing money into a mortgage is a really bad idea as it's the cheapest money you can get.

People have a fear of the mortgage but if you can afford then what's the problem.

If you have money over then invest it in an investment fund, or shares or a pension and get it to earn money for you rather than just give to a bank.

griffin100

SteM wrote: »

Yup, absolutely. Used to overpay by a lot more before we had the young fella but we still overpay every month with KBC.

1) It comes off the principal so you don't pay interest on whatever you overpay.
2) You can 'withdraw' what you've overpaid if you need it. It will take a few weeks but at least I know the money is available if a disaster happens.

I’ve been thinking about doing this so must check in with KBC. If the option to get the overpayments back is there in an emergency that makes it more attractive and I’d happily overpay by a few hundred each month.

For me it’s about having the mortgage paid off by the time I’m 60 so I have the choice of retiring at that age with a decent pension and lump sum with no mortgage payments if I want. My current mortgage will run until I’m 70 and I don’t look forward to having to make monthly payments or work until that age if I don’t want to.

TomSweeney

Jaysus, I wish I could , to those sneering at the ones paying the minimum - not everyone is lucky enough to be on such massive salaries to overpay ...

TomSweeney

PokeHerKing wrote: »

You should have the below before looking to overpay your mortgage:

- Pension contributions maxed out
- no other debt at higher rates
- 3/6 months wages saved

Once the above are ticked you should absolutely be paying it off as quick as possible.

Brilliant...
let's run through them ...

- Pension contributions maxed out - eh I've zero pension contributions, why would I put money away for 30 years to have them tell me at the end that they blew it ? this has happened so much there is no way i'd risk it.

- no other debt at higher rates - OK here ...

- 3/6 months wages saved - I've about 3 months in my own personal savings, but taking savings with my wife/holidays account etc would add to more..

Leg End Reject

Yes, lucky enough to have bought before prices went crazy.

Pension contribution, set amount into savings and a €200 overpayment on my mortgage.

The overpayment can be withdrawn without penalty, so it's technically a rainy day fund if required too, if not it saves interest over the life of the mortgage and reduces the term.

SteM

jj880 wrote: »

I find it hard to believe a bank would allow overpayment of principal only. What does a bank get from offering that?

The only person I know of who tried this with AIB was laughed out of the place and told they could shorten the mortgage term but any overpayment would go towards principal + interest. She went ahead and paid up 24 months of payments but took that period as a break from making any payments.

I realise she could be spoofing. She has been known to cry poor.

I don't know about AIB but KBC do. It's in the doc you sign when you set the overpayment up. "The additional payments will be deducted from your capital balance".

SteM

TomSweeney wrote: »

Jaysus, I wish I could , to those sneering at the ones paying the minimum - not everyone is lucky enough to be on such massive salaries to overpay ...

I don't see one sneering post tbh. I see people answering a question that the OP asked, sorry you see that as people sneering at you.

McGinniesta

Mortgages are for suckers.

Cash customers only.

[Deleted User]

Leg End Reject wrote: »

Yes, lucky enough to have bought before prices went crazy.

Pension contribution, set amount into savings and a €200 overpayment on my mortgage.

The overpayment can be withdrawn without penalty, so it's technically a rainy day fund if required too, if not it saves interest over the life of the mortgage and reduces the term.

Are you sure?

'Overpayments made are not refundable'
https://personalbanking.bankofireland.com/borrow/mortgages/existing/mortgage-flexi-options/#panel3
If you remortgage for a lower rate any overpayment would be locked in for sure.

2011

I only overpay by a small amount. I could increase the amount considerably but then I would be able to put much into my pension. As I’m lucky enough to be on a tracker I’m only on 0.5% interest so it’s “cheap money”. What concerns me far more is how much I will have to live on when I finally retire.

tallaghtjoe

I overpay €200 pm also. We were each saving through the government saving scheme a while back but had mortgage organised before my one had finished. We just decided to continue with the payment as an overpayment on the mortgage, so we didnt really see difference in payout each month. It is knocking a few years off our mortgage term.

Leg End Reject

[Deleted User] wrote: »

Are you sure?

'Overpayments made are not refundable'
https://personalbanking.bankofireland.com/borrow/mortgages/existing/mortgage-flexi-options/#panel3
If you remortgage for a lower rate any overpayment would be locked in for sure.

They are with KBC, just need to email a picture of a signed letter. I've used it to replace a boiler.

Different banks might have different rules.

Blackjack

jj880 wrote: »

I find it hard to believe a bank would allow overpayment of principal only. What does a bank get from offering that?

The only person I know of who tried this with AIB was laughed out of the place and told they could shorten the mortgage term but any overpayment would go towards principal + interest. She went ahead and paid up 24 months of payments but took that period as a break from making any payments.

I realise she could be spoofing. She has been known to cry poor.

She was definitely spoofing. She probably didn't understand what she was being told, knew this but decided to blame the bank. That sort of behavior is quite common.

blue note

We do at the moment because we're in a position where we can without changing our lives in any way. We pay an extra 10% per month. Our mortgage is from 2018, so I'd call it a very high mortgage!

If we keep the same repayments, at our current interest rate we should be down to less than 10 grand interest being charged per year in 2025. And we should have her paid off in 2044.

I'm an accountant. I know that a mortgage is the cheapest money you'll ever get. I know that putting it into a pension is probably the sensible financial decision. However, the idea of clearing your mortgage early is nice. Being mortgage free in my 50s would be great.

jrosen

We overpay a little bit. I guess by the time we pay the mortgage, all the other monthly costs, put money aside for anything annual like car service/ insurance /tax/back to school/christmas/birthdays , then save for the kids college, general rainy day savings/holidays and living expenses there isn't a much left to over pay the mortgage and with rates so low it seems pretty pointless to take from any of the other places.

Tipperary animal lover

We overpaid for years and finished the last payment two months ago, great to have that monkey off our back and still be in our late 40s to enjoy a decent quality of life.

Paul_Mc1988

TomSweeney wrote: »

Jaysus, I wish I could , to those sneering at the ones paying the minimum - not everyone is lucky enough to be on such massive salaries to overpay ...

Nobody is sneering at anyone in here what are you taking about. People who have the means to overpay are simply giving their opinion about whether its good or bad.

Paul_Mc1988

jj880 wrote: »

I find it hard to believe a bank would allow overpayment of principal only. What does a bank get from offering that?

The only person I know of who tried this with AIB was laughed out of the place and told they could shorten the mortgage term but any overpayment would go towards principal + interest. She went ahead and paid up 24 months of payments but took that period as a break from making any payments.

I realise she could be spoofing. She has been known to cry poor.

You find something hard to believe even though a simple Google search tells you it's true. Used the Internet before?

Ulster Bank allow a 10% of your outstanding balance per year..... have 300k left on your mortgage and you can over pay by 30k

KBC allow the same

BOI fine you a very small amount

Paul_Mc1988

McGinniesta wrote: »

Mortgages are for suckers.

Cash customers only.

You're not wrong there. The amount of interest I pay over the lifetime of my mortgage (150k) makes me feel like a sucker sometimes

BraveDonut

I have a slightly different take on this.
I do have a rainy day fund that I could use to clear most/all of my mortgage.
However, I choose to continue to pay my low interest, manageable monthly amount as I see it is a form of savings.

If I cleared my mortgage and had more available cash at the end of the month, I would probably only start to spend more.

Paul_Mc1988

Another point I find frustrating is that people say a mortgage is the cheapest money you can get.

The money you save is the cheapest money you can get. Bar a mortgage which is a nessisary evil, taking a loan for anything else (holiday/car) is a mugs game. Buy the things you can afford and in the end you'll be much better off financially.

Leg End Reject

BraveDonut wrote: »

I have a slightly different take on this.
I do have a rainy day fund that I could use to clear most/all of my mortgage.
However, I choose to continue to pay my low interest, manageable monthly amount as I see it is a form of savings.

If I cleared my mortgage and had more available cash at the end of the month, I would probably only start to spend more.

That's an enviable position, fair play! I hope you have the money invested rather than sitting in an account.

[Deleted User]

On a tracker with a company that won't accept overpayments. I can write a cheque and send it in annually but can never seem to manage it with kids, bills, etc.

Paul_Mc1988

BraveDonut wrote: »

I have a slightly different take on this.
I do have a rainy day fund that I could use to clear most/all of my mortgage.
However, I choose to continue to pay my low interest, manageable monthly amount as I see it is a form of savings.

If I cleared my mortgage and had more available cash at the end of the month, I would probably only start to spend more.

But in the end you have less money and give money to a bank for no reason.

TheChizler

Bought an old house so everything's going toward renovating at the moment, definitely would be looking to overpay once that's out of the way.

Sgt Hartman

I'm still quite early into my mortgage but after a few years I'll definitely start overpaying. The quicker I can pay it off the better.

Kerry25x

I feel that the impact mortgage repayments make on your finances is a factor.

Could clear our mortgage in about 4 years (22 years early) if we overpaid by 2000 a month which is a less than what we put in to savings at the moment.

But our mortgage repayments are so low, about 6.5% of our take home income, that its pretty painless and having it cleared would honestly make very little difference to our quality of life.

jimmytwotimes 2013

Does you does or does you don't take Access?

murpho999

Niner leprauchan wrote: »

On a tracker with a company that won't accept overpayments. I can write a cheque and send it in annually but can never seem to manage it with kids, bills, etc.

Find an investment fund that returns more than the mortgage interest rate on your mortgage and then you're making money and then you can pay off your mortgage with the profits.

Really think people are foolish just overpaying their mortgage.