Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Do you overpay your mortgage?

Options
1…45679

Comments

  • Options
    #242
    ike
    Registered Users Posts: 1,406 ✭✭✭ike


    Yes we overpay

    If we stick to the original payment plan then we have approx 10 years left, if we keep overpaying at our current rate we will be clear in 2 years.

    If you can afford to overpay then do it, if not then stick to your original plan.


  • Options
    #243
    Lewis_Benson
    Registered Users Posts: 1,904 ✭✭✭Lewis_Benson


    No.


  • Options
    #244
    Louis Friend
    Banned (with Prison Access) Posts: 590 ✭✭✭Louis Friend


    Bass Reeves wrote: »
    well I am glad you are not my CFA.

    I have gone through the costs to put children through college already in this thread. It will cost in the region of 75K/child. By opening an investment in a child's name and putting money into it it will help to fund college. While most young adults work while going to college they will not use up all there tax Credit. As well some of the the money can be extracted into a normal account pre college. Even if you leave some money in the account till college there highest rate of tax is 20%

    Opportunity investment is where you keep saving in a cash form to invest when a down turn happens. This may be into stocks or into property. Last Apri/May If you invested in the Irish banks your return would be above 200%. If you had cash in 2012/2013 you could have bought apartments for the price of a midrange new car today such apartments are worth 4-5 time the cost then. Even as late as 2015/16 you could have bought houses in mid sized county towns for 50-80K that are worth 50% more than that now and you still have to add rental income to the return.

    Very little investment is passive. You have to actively look at all investment.

    This is just nonsense. What investment can you make in a child’s name where all of the returns are taxable at 20%? None, ‘cause they don’t exist.

    As for the other stuff, ‘DeLorean Capital’, travelling back in time to invest in bank shares. A great strategy, if you’re a lunatic.

    If there was an investment that guaranteed 4-6% per year, only a fool would ignore it.


  • Options
    #245
    The J Stands for Jay
    Registered Users Posts: 5,667 ✭✭✭The J Stands for Jay


    JimmyVik wrote: »
    I have used up the allowance each year of €2540 so no CGT tax payable of it so far anyway. I will keep using the CGT allowance each year to reduce any tax payable.

    What are you doing to use up the allowance?


  • Options
    #246
    The J Stands for Jay
    Registered Users Posts: 5,667 ✭✭✭The J Stands for Jay


    Bass Reeves wrote: »
    Even if you leave some money in the account till college there highest rate of tax is 20%

    How are you coming up with a rate of 20%? That would only apply to dividends.


  • Advertisement
  • Options
    #247
    The J Stands for Jay
    Registered Users Posts: 5,667 ✭✭✭The J Stands for Jay


    JimmyVik wrote: »
    I dont buy into that he is the only one running that company at all.
    What i like about them is that they are very transparent.
    But I think ETFs are probably a better way to go once you have enough invested in shares to use up your yearly cgt allowance.

    Your CGT allowance is only used up by disposing of the shares. Taxes are higher, and administration more onerous on ETFs for Irish investors.


  • Options
    #248
    The J Stands for Jay
    Registered Users Posts: 5,667 ✭✭✭The J Stands for Jay


    Trigger Happy wrote: »
    I was whupped during the dot com bubble and have stayed well clear of direct investments since then. At an extreme I would see putting spare cash in to direct investments as opposed to paying back the mortgage as borrowing to gamble (extreme- I know).

    My pension does not need any extra funds so I happily put any extra cash against the mortgage. It suits my current risk appetite and will help me achieve my goal of retiring early and funding the mini me through 3rd level.

    I can see why others would do differently and no harm in that - but I am happy with my own strategy.

    This is a sensible strategy. Pension is funded, and you're risk adverse. Paying off the mortgage is the way to go here.


  • Options
    #249
    The J Stands for Jay
    Registered Users Posts: 5,667 ✭✭✭The J Stands for Jay


    [Deleted User] wrote: »
    Avoid, in anyway possible paying interest only on your mortgage.

    This is the most important bit. But if you do insist on doing it, you should at least understand what you are doing.


  • Options
    #250
    Louis Friend
    Banned (with Prison Access) Posts: 590 ✭✭✭Louis Friend


    McGaggs wrote: »
    Your CGT allowance is only used up by disposing of the shares. Taxes are higher, and administration more onerous on ETFs for Irish investors.

    ETFs that are subject to CGT are not available to Irish investors.

    Even if you’re trading for free, the ETF needs to make more than 4.75% every year to “beat” overpaying your mortgage (based on the average new mortgage rate of 2.8%).

    “Sir/Madam, would you like a guaranteed return of 4.75% or to take your chances with markets at all time highs?”

    Or let’s put it anothet way, investing in your own name whilst carrying a mortgage is effectively the same as borrowing to invest. In my view, only a lunatic would borrow at around 3% to invest in equities.


  • Options
    #251
    JimmyVik
    Registered Users Posts: 5,368 ✭✭✭JimmyVik


    McGaggs wrote: »
    Your CGT allowance is only used up by disposing of the shares. Taxes are higher, and administration more onerous on ETFs for Irish investors.


    Its called harvesting. Very easy to do.
    Only go to ETFs when you have enough in shares to use up that allowance.
    If you then have to go to ETFs thats a good thing. It means you are doing well.
    A spreadsheet will sort out all you tax and you can pay them easily.
    And even with ETF tax alone you would still beat paying overpaying the mortgage.


    But I get it. Stock markets are not for everyone.
    But if you do do it properly you will be paying off your mortgage with your investments a lot earlier than if you just overpaid the mortgage.


  • Advertisement
  • Options
    #252
    JimmyVik
    Registered Users Posts: 5,368 ✭✭✭JimmyVik


    McGaggs wrote: »
    What are you doing to use up the allowance?


    If you look up CGT allowance harvesting you will find how it works.
    Still pretty crap in Ireland compared to other countries tbh, but at least its €2.5k per year.


  • Options
    #253
    thesimpsons
    Registered Users Posts: 1,694 ✭✭✭thesimpsons


    Bass Reeves wrote: »
    I have gone through the costs to put children through college already in this thread. It will cost in the region of 75K/child. By opening an investment in a child's name and putting money into it it will help to fund college. While most young adults work while going to college they will not use up all there tax Credit. As well some of the the money can be extracted into a normal account pre college. Even if you leave some money in the account till college there highest rate of tax is 20%

    where do you get this figure from ? I've had 3 children through college now and didn't pay anywhere near 75k per child. I paid accommodation and fees, etc , no grants of any kind, and they all had part time jobs in college and during summers which helped towards their personal and living costs, but there is no way it all came up to 75k per child. for a masters or further education, I don't know anyone who paid for their children. They all worked and paid their own way.


  • Options
    #254
    Bass Reeves
    Registered Users Posts: 18,202 ✭✭✭✭Bass Reeves


    thesimpsons wrote: »
    where do you get this figure from ? I've had 3 children through college now and didn't pay anywhere near 75k per child. I paid accommodation and fees and they all had part time jobs in college and during summers which helped towards their personal and living costs, but there is no way it all came up to 75k per child.

    College fees are over 3k. Most on campus accommodation is above 5K add in Electricity, heating, bins etc 5-600 euro. Add in travel and food and it about 10K/year. After that you may have a child who has to repeat a year full fee's cost 5K or above. Finally many will have to go on and do a masters,9fees about 10-20K) I expect that in future this will be the standard just like 40 years ago the leaving cert was the standard.

    As I pointed out as well there is a move to force parents to pay full college fees this may or may not happen but there is a risk it will.

    Slava Ukrainii



  • Options
    #255
    Cyrus
    Registered Users Posts: 19,731 ✭✭✭✭Cyrus


    [Deleted User] wrote: »
    This is an awfully funny thread. People get very defensive if anyone doesn't follow their instructions.

    I can only speak for myself, but I have a retired neighbor, who used work with mortgages in one of the main Irish Banks. He drives a very nice car, retired at an early age, and has, what I would consider a very comfortable life.
    He offered advice one evening, and I gladly listened to him.

    Bear in mind, I started with a 30 year mortgage of approx €350,000. 4 years fixed rated at 2.6%

    His advice, in simplistic terms was:
    1. Max out your pension contributions if you can afford to
    2. Have no more than 6 months of salary easily available - rainy day fund (Anyone more is not working for you)
    3. If you can find an investment that has a return of greater than 5%, then invest in it
    4. If you can't be sure of a greater than 5% return, then put that extra money into overpaying your mortgage

    Avoid, in anyway possible paying interest only on your mortgage.

    Very sensible and simple advice


  • Options
    #256
    2lazytogetup
    Registered Users Posts: 828 ✭✭✭2lazytogetup


    just slightly going off topic... but what about not getting a mortgage. just renting and putting money into a pension and investments. i find homes money pits. need to replace the boiler every few years. new gutters, roof to be fixed. kitchen needs to be replaced. house prices could potentially drop.


  • Options
    #257
    WhiteWalls
    Registered Users Posts: 945 ✭✭✭WhiteWalls


    2lazytogetup wrote: »
    just slightly going off topic... but what about not getting a mortgage. just renting and putting money into a pension and investments. i find homes money pits. need to replace the boiler every few years. new gutters, roof to be fixed. kitchen needs to be replaced. house prices could potentially drop.

    Think we will start to see this becoming a lot more common


  • Options
    #258
    Leg End Reject
    Registered Users Posts: 16,445 ✭✭✭✭Leg End Reject


    The benefit of a mortgage is that it's limited to x number of years and you have an asset. Yes, there's maintenance, property tax and insurance, but there's also security.

    Rent is for life, with no security in the private rental market.
    https://forumofgames.com/index.php

    >>> Staying Alive <<<



  • Options
    #259
    [Deleted User]
    Posts: 13,712 ✭✭✭✭ [Deleted User]


    This thread is great reading in the middle of the night, isn't it? Reading about other people's genius investments, and simultaneously, how dear everything will be with university fees and whatnot. Two clocks in this room are ticking, very ominously.


  • Options
    #260
    2011
    Moderators, Home & Garden Moderators, Technology & Internet Moderators, Regional East Moderators Posts: 12,536 Mod ✭✭✭✭2011


    2lazytogetup wrote: »
    just slightly going off topic... but what about not getting a mortgage. just renting and putting money into a pension and investments. i find homes money pits. need to replace the boiler every few years. new gutters, roof to be fixed. kitchen needs to be replaced. house prices could potentially drop.

    How do you think landlords pay for these costs?
    Answer: They build them into the price of the rent.

    So unfortunately those of us that are stuck in the rent trap end up paying someone else’s property related bills. Also I wouldn’t fancy trying to pay rent as a pensioner, mortgages should be paid off at this point.


  • Options
    #261
    styer
    Registered Users Posts: 230 ✭✭styer


    https://www.boards.ie/discussion/comment/117095233#Comment_117095233

    Nicely put together



  • Advertisement
  • Options
    #262
    Cluedo Monopoly
    Registered Users Posts: 8,700 ✭✭✭Cluedo Monopoly


    https://www.boards.ie/discussion/comment/117039230#Comment_117039230

    Good advice. Prioritise any higher interest rate loans or credit first. Then build up savings and pension so you don't need future short term loans with higher rates.

    Mortgage is cheapest interest rate you will ever have.

    What are they doing in the Hyacinth House?



  • Options
    #263
    AndyBoBandy
    Moderators, Social & Fun Moderators Posts: 14,994 Mod ✭✭✭✭AndyBoBandy


    https://www.boards.ie/discussion/comment/118921570#Comment_118921570

    While I agree largely with this last point, I'd also counter it with the potential savings to be made on interest on debt that some of which will be 20+ years old by the time it eventually gets paid off.

    I took out a mortgage 8 years ago next month over a 20 year term, and have been consistently overpaying it off such that at our current overpayment rates it will be clear in 11 months, so we've reduced our term from 20 years to 8 years & 11 months. The interest calculated for the 20 year term was about €81k, and by the time we're fully paid off the total interest we'll have paid will be around €31k, so I'm seeing the benefit of our overpayments as a €50k saving in interest I would have otherwise paid the bank.


    Which is the loan you'd want to pay off quicker? €150k over 20 years @ 3%, or €20k over 4 years at 6.9%?



  • Options
    #264
    Cluedo Monopoly
    Registered Users Posts: 8,700 ✭✭✭Cluedo Monopoly


    https://www.boards.ie/discussion/comment/118921862#Comment_118921862

    I guess it also depends on inflation including salary inflation and what % of my income is going into the mortgage and interest in 10 years.

    What are they doing in the Hyacinth House?



  • Options
    #265
    Amirani
    Moderators, Society & Culture Moderators Posts: 12,521 Mod ✭✭✭✭Amirani


    https://www.boards.ie/discussion/comment/118921862#Comment_118921862

    Best approach here is to pay off the 6.9% loan of 20k first. After that is completed, start paying off that 3% loan with the overpayment amount as well as the amount you were previously paying for the previous loan.



  • Options
    #266
    victor8600
    Registered Users Posts: 1,616 ✭✭✭victor8600


    No, I have not even maximized my pension contributions yet. IMO, there is no point in clearing a cheap mortgage early if you have any other way to profitably invest your money.



  • Options
    #267
    AndyBoBandy
    Moderators, Social & Fun Moderators Posts: 14,994 Mod ✭✭✭✭AndyBoBandy


    https://www.boards.ie/discussion/comment/118922062#Comment_118922062

    Is it though?


    3% APR on €100k is €3,000 & 6.9% APR on €20,000 is €1,380, so although it's a higher interest rate, in the grand scheme you'd be paying more interest on the lower interest rate loan as it's 5 times larger than the 6.9% loan. Now I know eventually the capitol amount on the larger loan would reduce to the point where it would then make more sense to concentrate the overpayments on the higher interest loan, but that figure would be around €46,000 as I see it.



  • Options
    #268
    Ray Palmer
    Registered Users Posts: 8,364 ✭✭✭Ray Palmer


    Weird a lot of people here are not overpaying their mortgage because they aren't getting it taken off the principle. They are prepaying their regular mortgage and not getting the benefit of overpaying.

    The mortgage rate is so low at the moment it makes no sense to over pay. I couldn't get a loan at the value of my mortgage rate so I am better off not paying it at the moment and use the money to improve the house. I am only paying €600 in interest a year and close to the end.



  • Options
    #269
    Paul_Mc1988
    Registered Users Posts: 748 ✭✭✭Paul_Mc1988


    I took out a 30 year mortgage and have my morgage nearly 30 months now. It was 330k at 2.6%. Initial payment was 1321. Payment now 1054. In another 30 months it should be down to about 780.

    I'm saving a ton on interest and will have it paid off in ten years. I lived through that last recession in and out of jobs like a yoyo and the pleasure I get knowing I'll be comfortable if it happens again is enough to keep me going on with the overpayments.



  • Options
    #270
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,834 Mod ✭✭✭✭L1011


    Currently paying the max 10% overpayment, has a negligible impact; when the fixed rate expires I intend to change it to a 25% overpayment. Have a pension already.

    I kept the payment much the same when I got a significant rate cut (4.lots% to 3.9%) by taking a full year off the term to begin with; and did so again when remortgaging (3.9% to 2.25%) so I should have it all paid off in May 2029 rather than January 2033 even without increasing it again.



  • Advertisement
  • Options
    #271
    Ginger83
    Registered Users Posts: 3,460 ✭✭✭Ginger83


    Overpaying by roughly 60%



Advertisement