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Overpaying mortgage

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Comments

  • #32
    um7y1h83ge06nx
    Closed Accounts Posts: 5,029 ✭✭✭um7y1h83ge06nx


    I'm with Ulster Bank on fixed as well and had to send the mortgage group a letter to instruct that I wanted the lump sum to reduce the mortgage term. They sent a letter back confirming this and it all went through fine.

    By default it reduces the monthly payments.


  • #33
    antix80
    Registered Users Posts: 2,419 ✭✭✭antix80


    NoviGlitzko wrote: »
    Find an accountant who your family or extended family trusts - ask them for advice mate.

    :rolleyes:


  • #34
    drunkmonkey
    Registered Users Posts: 28,090 ✭✭✭✭drunkmonkey


    Move it to a bit weekly payment rather than a monthly one.. your slightly overpaying the mortgage but attacking the interst quicker. You won't really notice it for a few years.


  • #35
    Amirani
    Moderators, Society & Culture Moderators Posts: 12,521 Mod ✭✭✭✭Amirani


    awec wrote: »
    This is not true. The saving is exactly the same, but reducing the mandatory payment vs reducing the term is much safer.

    I cannot think of a single advantage to reducing the term when overpaying a mortgage.

    If you're with Bank of Ireland for example, and limited to only overpaying 10% of the mortgage repayment, then reducing the mandatory payment means your limited in what you can repay.

    For example, your mortgage is €1000 p/m. You want to regularly overpay by 10%, so paying €1100 p/m. If you reduce the term, you can continue paying €1100 p/m for the entirety of the mortgage. If you reduce the payment, then you can't, because you'll only be allowed to pay new payment amount + 10%

    In this case, reducing the term results in finishing the mortgage sooner, and paying less interest over the life of the mortgage.


  • #36
    JJJackal
    Registered Users Posts: 1,016 ✭✭✭JJJackal


    If you have a 30 year mortgage at interest rate of 2.65% and you pay of an extra euro in month 1 it will save you approximately 1.19 euro in interest.

    It will also allow you to use the money (i.e. the 1.19 euro over 30 euro) that you are no longer using to pay the interest to pay down principle thus further saving.


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  • #37
    Sunrise_Sunset
    Registered Users Posts: 1,211 ✭✭✭Sunrise_Sunset


    My mortgage with PTSB is split. The majority of it is tracker + 1% (2.1%), and I've another 40k on a fixed rate of 3.2% for 5 years.
    I know that I can make overpayments on my tracker without any penalties.
    Today I enquired with them if the same can be done with the fixed portion. They told me I can transfer money to the mortgage account until the fixed term is up, then I can make the overpayment, before starting my new term.
    I don't know if this is worth my while, or whether I should just increase the overpayments I have recently started making on the tracker portion. The fixed portion monthly repayment is 205, and could only afford to "overpay" by 25 per month. Over 5 years this would be 1500.
    I want to avoid any penalties and hope that the information they gave me is correct.
    I started overpaying the tracker by 150 per month. Although the interest rate is lower, at least I know there won't be any penalties for overpaying, and I hope to knock about 5 years off the term.


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