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To clear mortgage or not

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24

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    #32
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,204 Mod ✭✭✭✭godtabh


    I'd pay the mortgage off in a heart beat.


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    #33
    noel100
    Registered Users Posts: 358 ✭✭noel100


    Buy crypto currency


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    #34
    3DataModem
    Registered Users Posts: 3,957 ✭✭✭3DataModem


    A pretty good short / mid term strategy is to pay off 3000 per month instead of 800 per month. In a year if you've not thought of anything else, you've at least knocked another 27k off the mortgage.

    In a year, things will be clearer. I would generally advocate not putting the money anywhere except the house (either by clearing the mortgage or extending).

    If you feel like blowing 15k on a holiday or something (and after an illness issue, you are entitled to), definitely just jam the other 155k into the mortgage, and look forward to the end of 2020 when you'll be mortgage free, stress free, and 800 per month richer.


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    #35
    ger664
    Registered Users Posts: 2,400 ✭✭✭ger664


    Was in your spot in 2006. Best advise I got was clear the mortgage, you will have a roof over your families head when and if things go tits up down the road.


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    #36
    twowheelsonly
    Registered Users Posts: 2,268 ✭✭✭twowheelsonly


    I'd also go with paying off the mortgage. 100% no brainer for me.

    If your wife stays working until August /September (start of new school / creche terms) you can save a nice little sum in the meantime and when she takes a break the savings on childcare will allow you to continue to do so.

    The freedom that being mortgage free will give you will justify paying it off. If you just kept saving that 800 for the next 25 years you'd have €240k at the end of it AND the house. If you don't pay off the mortgage now (and if you're anything like me!!! ) there'll be 10k here and 15k there maybe 30 or 40 on an extension as well. Potentially you could end up in 25 years time with the house but much smaller savings. You'll also have paid out 70k or so in interest, money that could be in your pocket or earning even more for you rather than the bank.

    Even if you didn't save that 800 a month for the next 25 years you'd still have 10k a year extra per year to spend on family / holidays etc.


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    #37
    long_b
    Registered Users Posts: 4,933 ✭✭✭long_b


    How come your mortgage protection paid out at all? I must be missing something


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    #38
    .G.
    Registered Users Posts: 5,415 ✭✭✭.G.


    Yeah I'd pay off the mortgage if I were you. Debt free and one of you gets to take a work break and to spend quality time with the kids at a very young age is a great thing imo.


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    #39
    randombar
    Registered Users Posts: 3,362 ✭✭✭randombar


    That mortgage will cost you 58,794.53 in interest based on 2.5% (I'm guessing rates would go up at some stage) so any investment would have to make more than that after dirt?

    Pay off the mortgage. Figure out after what to do with your additional income.


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    #40
    ANXIOUS
    Registered Users Posts: 3,095 ✭✭✭ANXIOUS


    long_b wrote: »
    How come your mortgage protection paid out at all? I must be missing something

    I think that's where he is getting confused. This is a serious illness policy, which isn't a requirement for a mortgage so not surprised it wasn't assigned to the bank.


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    #41
    Muppet Man
    Registered Users Posts: 1,650 ✭✭✭Muppet Man


    100% mortgage - you will NEVER be evicted.


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    #42
    mugsymugsy
    Registered Users Posts: 1,569 ✭✭✭mugsymugsy


    Clear the mortgage down to say 16k and then you have some cash for a holiday and a bit of cash to access if things crop up.

    Best of luck op for the future


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    #43
    long_b
    Registered Users Posts: 4,933 ✭✭✭long_b


    ANXIOUS wrote: »
    I think that's where he is getting confused. This is a serious illness policy, which isn't a requirement for a mortgage so not surprised it wasn't assigned to the bank.

    Sorry, yes - serious illness policy.

    If it paid out then someone is pretty unwell? In which case future mortgage payments could become difficult to maintain?


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    #44
    phormium
    Registered Users Posts: 3,296 ✭✭✭phormium


    Clear the bulk of the mortgage at least, keep some as a savings cushion and treat yourselves to something you fancy like a holiday for example.


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    #45
    ANXIOUS
    Registered Users Posts: 3,095 ✭✭✭ANXIOUS


    long_b wrote: »
    Sorry, yes - serious illness policy.

    If it paid out then someone is pretty unwell? In which case future mortgage payments could become difficult to maintain?

    It could be for a wide rang of things, in particular and generally the older the policy the wider definition of illness covered. Some pay out for getting a stint or any open heart surgery.


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    #46
    Tazz T
    Registered Users Posts: 3,200 ✭✭✭Tazz T


    At some stage over the next 25 years interest rates will be much higher than they are now. There is no guarantee you and your partner will enjoy the same levels of income over that same period of time, you could even get in trouble with your repayments.

    Paying your mortgage off now could be the best risk free investment in your future you ever make. And you will immediately have 800 extra income per month.

    And should you need a lump sum at any time in the future, you have your home as collateral.


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    #47
    cnocbui
    Registered Users Posts: 19,762 ✭✭✭✭cnocbui


    Clear the mortgage - absolute no brainer. The only time when you wouldn't want to do that is if you can invest that money at a higher rate of return than the mortgage costs. Good luck with that in this country.


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    #48
    Larsso30
    Registered Users Posts: 560 ✭✭✭Larsso30


    clear the mortgage 100%.


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    #49
    podge018
    Registered Users Posts: 1,815 ✭✭✭podge018


    long_b wrote: »
    How come your mortgage protection paid out at all? I must be missing something

    Without getting too specific, there was a critical illness diagnosis which after a procedure is now gone, hopefully never to return. A close eye will be kept on it however.


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    #50
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,634 Mod ✭✭✭✭Henry Ford III


    podge018 wrote: »
    Without getting too specific, there was a critical illness diagnosis which after a procedure is now gone, hopefully never to return. A close eye will be kept on it however.

    Sounds like the policy should have been assigned to the lender but for whatever reason wasn't.

    If the lender knew the insurer had paid out they'd probably be giving you a call......

    p.s. I'd pay them back but retain enough for any extension you are planning.


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    #51
    Amirani
    Moderators, Society & Culture Moderators Posts: 12,521 Mod ✭✭✭✭Amirani


    GaryCocs wrote: »
    That mortgage will cost you 58,794.53 in interest based on 2.5% (I'm guessing rates would go up at some stage) so any investment would have to make more than that after dirt?

    This is pretty much the main consideration.

    The OP should also consider their pension situation. Are they paying anything into their pension currently and are they availing of a potential employer match? This can offer automatic tax benefits of 40% upfront (20% long term) in addition to extra money offered by your employer to match your contributions.

    It's generally worth talking to a financial adviser here. If you're not currently taking advantage of tax and compounding benefits of a pension then invest some here (only up to tax benefit and employer match), it's the only thing that will pretty much guarantee a better return than paying down your mortgage. If you already have a pension sorted, pay off the majority of your mortgage, and just hold 6 months worth of expenses in a dedicated savings account in case anything goes wrong down the line.


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    #52
    323
    Registered Users Posts: 1,135 ✭✭✭323


    Pay off the morgage.
    We went against all financial advice before the bust and did just that. Great peace of mind since.
    Lots of options with that €800/month you'll have in your pocket, lifestyle change, holiday or investment without worrying about one of you not being able to work, interest rate increases etc.

    “Follow the trend lines, not the headlines,”



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    #53
    Exiled1
    Registered Users Posts: 332 ✭✭Exiled1


    Have had four mortgages so far. Tried to pay off each one was soon as possible. Try throwing lump sums against the mortgage every chance you get. I know it is not easy and indeed, tempting to buy something else etc but your most economical move over a mortgage lifetime is to pay of the damn thing asap.


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    #54
    ANXIOUS
    Registered Users Posts: 3,095 ✭✭✭ANXIOUS


    Henry Ford III wrote: »
    Sounds like the policy should have been assigned to the lender but for whatever reason wasn't.

    If the lender knew the insurer had paid out they'd probably be giving you a call......

    p.s. I'd pay them back but retain enough for any extension you are planning.

    Why should it have been assigned to the mortgage? It's not needed for mortgage drawdown, the product is designed exactly for what has happened the person got ill and has the option to pay off their mortgage.


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    #55
    NSAman
    Registered Users Posts: 3,388 ✭✭✭NSAman


    Pay off your mortgage for gawds sake.

    You have your house paid for and have security for your family. Who knows what life will bring in the future. At least you know you, your partner and kids have a roof over their heads.

    Once that is done save the 800 pm and build your extension should only take another 4 years to build something special and fully paid for.


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    #56
    The J Stands for Jay
    Registered Users Posts: 5,664 ✭✭✭The J Stands for Jay


    podge018 wrote: »
    Policy has fully paid out, end of story.

    They made a mistake when setting it up and it should have been assigned to the mortgage provider, not us. We'd have no say then and would be mortgage free.
    It seems it's quite rare that we get the money to do with what we want.

    The issue here is that you have a mortgage without any life cover. If you decide not to pay it off, you'd need to sort something out here. I wonder would the bank insist on having the mortgage paid off if they were aware of the situation?


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    #57
    The J Stands for Jay
    Registered Users Posts: 5,664 ✭✭✭The J Stands for Jay


    whiskeyman wrote: »
    How much is extension going to cost?
    I know clearing down mortgage is often said, but it's probably the cheapest loan you'll have.
    May be worth clearing some of it depending on the extension.
    Is that extension really needed though? Any other upgrades required?

    The cheapest loan you'll have is still more expensive than no loan


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    #58
    Seve OB
    Registered Users Posts: 15,841 ✭✭✭✭Seve OB


    probably cant pay off the mortgage as you are locked into a 5 year fixed and only a few months in
    could be severe penalties to get out of that
    think and get advice before you jump to quick


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    #59
    treade1
    Registered Users Posts: 149 ✭✭treade1


    It is no brainer. You have to pay off the mortgage. Either you or your wife had a very serious medical condition which resulted in the mortgage protection pay out. Who knows what could occur in the future. You need to pay off the mortgage to secure your families future.


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    #60
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,634 Mod ✭✭✭✭Henry Ford III


    ANXIOUS wrote: »
    Why should it have been assigned to the mortgage? It's not needed for mortgage drawdown, the product is designed exactly for what has happened the person got ill and has the option to pay off their mortgage.

    OP said so.

    "Delux" MPPA/term assurance can include stand alone or accelerated S.I. cover.


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    #61
    Mooooo
    Registered Users Posts: 8,611 ✭✭✭Mooooo


    Talk to a financial advisor. Get all options.
    After that look at yer own situatuon, is there anything that needs doing? The mortgage at 2.5% is cheaper than any other loan. Perhaps put aside an amount for savings, do whatever needs doing and then put a lump some towards the mortgage. You know your own situation best


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