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Do you overpay your mortgage?

  • 30-04-2021 10:16am
    #1
    [Deleted User]
    Posts: 14,344 ✭✭✭✭


    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?

    Do you overpay your mortgage? 442 votes

    Yes! Pay everything I can off it
    59% 261 votes
    I overpay a small bit.
    14% 63 votes
    No. I'd rather the money in my pocket.
    11% 50 votes
    Don't have a mortgage.
    15% 68 votes


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Comments

  • #2
    trixi001
    Registered Users Posts: 200 ✭✭trixi001


    Yes, i overpay mine. Everytime i remortgage etc and get lower fixed payments, i continue to pay what i was paying before - my mortgage allows overpayments of £500 a month

    I advised all my friends on variable rate mortgages during the recession to continue to pay what they were paying before every time the interest rate dropped (assuming they had the same income). Don't think many of them listened to me.


  • #3
    SteM
    Registered Users Posts: 6,516 ✭✭✭SteM


    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.


  • #4
    barney shamrock
    Registered Users Posts: 870 ✭✭✭barney shamrock


    About 11k left on our mortgage, I'm going to throw 5k at it soon so it will be paid off next year.


  • #5
    mrcheez
    Registered Users Posts: 13,610 ✭✭✭✭mrcheez


    2 more years on mine... threw in a lump sum there last week before starting another fixed rate term bringing it down another 3 years.... happy days

    Actually matures the month of my birthday

    And to the OP... yes always overpay and keep monthly repayments same for the past 6 years


  • #6
    sydthebeat
    Subscribers Posts: 40,922 ✭✭✭✭sydthebeat


    Yes.

    Lucky enough to have a small mortgage and be able to pay 50% more each payment. Came in handy back last April when lockdown meant my job finished prematurely. When we checked about a moritorium we were told we were 18 months ahead in payment.... Which meant that when we restated payments this year we'd only eaten 9 months into our over payment.

    I'm back to paying an extra 50% per month again


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  • #7
    Stark
    Registered Users Posts: 20,876 ✭✭✭✭Stark


    Don't have one but hoping to take one out soon and will probably take out a 25 year term (brings me to my 65th birthday) and try to make overpayments as habit rather than taking out a shorter term mortgage which I could afford but could leave me stuck if disaster struck.


  • #8
    [Deleted User]
    Posts: 0 ✭[Deleted User]


    Yip, overpay by €250 a month. Ulster Bank allow us to overpay up to 10% of the remaining value of the mortgage per year. So, if mortgage was €350,000 on Jan 1st 2021, then I overpay up to €35,000 in 2021. This is on a 4year fixed rate mortgage.
    Plan is to increase overpayments by €50 a month each year, while it's affordable.

    There is a great calculator out there, which allows you to see the benefit of overpaying on a mortgage.
    https://www.mtgprofessor.com/calculators/Calculator2a.html

    Based on my overpayment plan, I should increase the length of my mortgage by 90 months, and save €111,000


  • #9
    [Deleted User]
    Posts: 13,712 ✭✭✭✭[Deleted User]


    No I certainly do not overpay my mortgage and whenever this question comes up, I find myself getting very mad at Eddie Hobbs, who used to go around telling everyone to overpay their mortgage.

    If you are already very rich, then overpay your mortgage. Most of us are not at all rich.

    Like most mortgage owners, I don't have a big rainy day fund sitting in a bank account, so comparing savings vs lending interest rates is purely theoretical in the first place.

    If I put all my money into my mortgage, however, i will inevitably need a personal loan sometime in the future, or run up a big credit card debt. Have you seen the rates they charge?

    Keep your money. Pay at the agreed rate. If you are likely to need a personal loan in the medium -future, do not pay down your mortgage. Save that money for a rainy day.


  • #10
    super1290
    Registered Users Posts: 11 ✭super1290


    so if your on fixed rate and have DD coming out every month. how do you do the overpayment every month? by telephone and pay by card? or what.


  • #11
    Icemancometh
    Registered Users Posts: 854 ✭✭✭Icemancometh


    A Tyrant Named Miltiades! wrote: »
    No I certainly do not overpay my mortgage and whenever this question comes up, I find myself getting very mad at Eddie Hobbs, who used to go around telling everyone to overpay their mortgage.

    If you are already very rich, then overpay your mortgage. Most of us are not at all rich.

    Like most mortgage owners, I don't have a big rainy day fund sitting in a bank account, so comparing savings vs lending interest rates is purely theoretical in the first place.

    If I put all my money into my mortgage, however, i will inevitably need a personal loan sometime in the future, or run up a big credit card debt. Have you seen the rates they charge?

    Keep your money. Pay at the agreed rate. If you are likely to need a personal loan in the medium -future, do not pay down your mortgage. Save that money for a rainy day.

    I think having a rainy day fund is a given if you're planning to overpay your mortgage. Not sure what the rule of thumb is with months of wages etc for cash savings. But once that's in place, yep I overpay mine.


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  • #12
    mrcheez
    Registered Users Posts: 13,610 ✭✭✭✭mrcheez


    A Tyrant Named Miltiades! wrote: »
    No I certainly do not overpay my mortgage and whenever this question comes up, I find myself getting very mad at Eddie Hobbs, who used to go around telling everyone to overpay their mortgage.

    Certainly there's an argument to keep it as it will be cheapest loan you'll ever get, but if you can it makes economic sense to clear it off as soon as you can.

    But yes, if you are going to need a loan in the future due to overpaying the mortgage don't do it.


  • #13
    sydthebeat
    Subscribers Posts: 40,922 ✭✭✭✭sydthebeat


    super1290 wrote: »
    so if your on fixed rate and have DD coming out every month. how do you do the overpayment every month? by telephone and pay by card? or what.

    Set the DD above the minimum payment...???


  • #14
    [Deleted User]
    Posts: 596 ✭[Deleted User]


    Fixed with EBS. Not able to overpay. I am saving a lump sum though that’ll be lobbed at the mortgage when the fixed term is up.


  • #15
    mrcheez
    Registered Users Posts: 13,610 ✭✭✭✭mrcheez


    super1290 wrote: »
    so if your on fixed rate and have DD coming out every month. how do you do the overpayment every month? by telephone and pay by card? or what.

    You generally fix it with the bank... discuss the options. You might need to wait until your current fixed rate ends and then set it up at a new rate per month.


  • #16
    screamer
    Registered Users Posts: 6,130 ✭✭✭screamer


    A Tyrant Named Miltiades! wrote: »
    No I certainly do not overpay my mortgage and whenever this question comes up, I find myself getting very mad at Eddie Hobbs, who used to go around telling everyone to overpay their mortgage.

    If you are already very rich, then overpay your mortgage. Most of us are not at all rich.

    Like most mortgage owners, I don't have a big rainy day fund sitting in a bank account, so comparing savings vs lending interest rates is purely theoretical in the first place.

    If I put all my money into my mortgage, however, i will inevitably need a personal loan sometime in the future, or run up a big credit card debt. Have you seen the rates they charge?

    Keep your money. Pay at the agreed rate. If you are likely to need a personal loan in the medium -future, do not pay down your mortgage. Save that money for a rainy day.

    Absolutely agree here. Mortgage interest rates are the lowest of any type for borrowings, so unless you have a serious rainy day fund accumulated, it makes no sense to cripple yourself overpaying a mortgage to then have to take our personal loans at 3 times the interest rate cause you’ve no money left.


  • #17
    PokeHerKing
    Registered Users Posts: 4,203 ✭✭✭PokeHerKing


    A Tyrant Named Miltiades! wrote: »
    No I certainly do not overpay my mortgage and whenever this question comes up, I find myself getting very mad at Eddie Hobbs, who used to go around telling everyone to overpay their mortgage.

    If you are already very rich, then overpay your mortgage. Most of us are not at all rich.

    Like most mortgage owners, I don't have a big rainy day fund sitting in a bank account, so comparing savings vs lending interest rates is purely theoretical in the first place.

    If I put all my money into my mortgage, however, i will inevitably need a personal loan sometime in the future, or run up a big credit card debt. Have you seen the rates they charge?

    Keep your money. Pay at the agreed rate. If you are likely to need a personal loan in the medium -future, do not pay down your mortgage. Save that money for a rainy day.

    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.


  • #18
    Irishder
    Registered Users Posts: 926 ✭✭✭Irishder


    Have a tracker rate of 0.9% above ECB, cheapest loan i will ever have so in no rush to pay it off would rather invest any spare cash i have or avoid taking out higher interest loans such as credit cards, credit union etc.

    Should only overpay your mortgage if you have no other loans outstanding.


  • #19
    [Deleted User]
    Posts: 0 ✭[Deleted User]


    super1290 wrote: »
    so if your on fixed rate and have DD coming out every month. how do you do the overpayment every month? by telephone and pay by card? or what.

    I rang Ulster Bank, and they gave me an IBAN that I used to setup a Standing Order. Can cancel/amend whenever I want


  • #20
    Kerry25x
    Registered Users Posts: 554 ✭✭✭Kerry25x


    Nope, probably should though since my repayments are so low anyway, I'll get it down to €480 a month after my next mortgage provider switch.

    Planning to upsize in the next year or 2 so doesn't really seem worth it to be overpaying now.


  • #21
    [Deleted User]
    Posts: 0 ✭[Deleted User]


    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.

    This is the most important post in the thread


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  • #22
    SteM
    Registered Users Posts: 6,516 ✭✭✭SteM


    super1290 wrote: »
    so if your on fixed rate and have DD coming out every month. how do you do the overpayment every month? by telephone and pay by card? or what.

    I know that KBC have a form that you need to fill in and send back.


  • #23
    Mimon
    Registered Users Posts: 1,474 ✭✭✭Mimon


    mrcheez wrote: »
    You generally fix it with the bank... discuss the options. You might need to wait until your current fixed rate ends and then set it up at a new rate per month.

    With Bank of Ireland I rang them after a couple of months of starting the mortgage and they changed my payments to reflect the max overpayment straight away.

    Would just ring the bank and ask.

    Just signed up to a ten year fixed, must ring to make sure I still will be overpaying the max.


  • #24
    eviltwin
    Registered Users Posts: 17,495 ✭✭✭✭eviltwin


    We got a 25 year mortgage but the plan was always to pay it back as quickly as possible. We were lucky to get a small mortgage before prices went mad while both on low pay, since our earnings have increased he pays the extra mortgage and I put my extra into the credit union so we have savings if the worst were to happen. My mortgage will hopefully be paid off next year, we have no other loans or debt.


  • #25
    Mimon
    Registered Users Posts: 1,474 ✭✭✭Mimon


    bazwraf wrote: »
    This is the most important post in the thread

    Depends on the size of the mortgage/monthly repayment?

    I have a small mortgage and by overpaying will be have it repayed in 15 years vs the 20 originally scheduled.


  • #26
    Paul_Mc1988
    Registered Users Posts: 748 ✭✭✭Paul_Mc1988


    screamer wrote: »
    Absolutely agree here. Mortgage interest rates are the lowest of any type for borrowings, so unless you have a serious rainy day fund accumulated, it makes no sense to cripple yourself overpaying a mortgage to then have to take our personal loans at 3 times the interest rate cause you’ve no money left.

    But why would you have to take out the loan. I over pay by €1500-€2000 a month. If I want to buy something in the future I would just stop overpaying and save for a few months buy the item then start overpaying again.


    Having saving with little to no interest is way worse than paying off your mortgage saving thousands


  • #27
    cheekypup
    Registered Users Posts: 73 ✭✭cheekypup


    I've been paying about €100 a month extra, started a few years ago, I review it every year and the amount may change depending on circumstances at the time. I have 12 years left but if I can keep the payments up I hope to be finished 20 to 24 months earlier, roughly calculated.


  • #28
    SteM
    Registered Users Posts: 6,516 ✭✭✭SteM


    Paul_Mc1988 wrote: »
    But why would you have to take out the loan. I over pay by €1500-€2000 a month. If I want to buy something in the future I would just stop overpaying and save for a few months buy the item then start overpaying again.


    Having saving with little to no interest is way worse than paying off your mortgage saving thousands

    TBF, a 'rainy day' fund is money that you would usually need in a hurry imo. Saving to get that money might not feasible.


  • #29
    jj880
    Registered Users Posts: 4,185 ✭✭✭jj880


    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.


  • #30
    Feisar
    Registered Users Posts: 6,596 ✭✭✭Feisar


    Surplus money would be better in a pension I would have thought?

    First they came for the socialists...



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  • #31
    [Deleted User]
    Posts: 13,712 ✭✭✭✭[Deleted User]


    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.
    absolutely agree with this.

    I've heard of people with no pension paying down their mortgages, which is madness. You must be absolutely clear about the tax/ savings alternatives.


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