Overpayments sit as a credit on the account, reducing the interest accruing balance, but don't change your maturity date / repayments. When you need money for something else, you can stop paying the mortgage, and the 'credit' starts getting used up.
This is the point I was trying to make about not make investment decisions today based on something in 18 years time.
It is just plain wrong to borrow money today at 3% to put it on deposit at 0%.
It is just plain wrong to borrow money today at 3% to invest in shares in the hope that one will get a return after tax and expenses in excess of 3%,
The world will be a different place in 18 years. If Gordon is a ptsb customer when his kids are going to school, he will be able to take a long mortgage break to pay for their education. But most people who have a mortgage today will not have that same mortgage in 18 years.
They may have switched lender.
They may have moved home.
They may have stayed in their home but paid off their mortgage in full.
For you to be right Gordon, you have to make a huge number of assumptions to hold over the next 18 years and everyone of those assumptions would have to be correct.
1) The returns on your mixed cash and equity fund after inflation will have to well exceed the mortgage rate to compensate for the risk involved
2) Your children will want to go to college
3) You would not be able to afford college fees in 18 years times from your income combined with savings from the previous 5 years - don't forget that your mortgage repayments will be a lot lower.
4) You will not have received any inheritances or other windfalls
5) You will not have moved home or switched mortgage in the next 18 years
6) In 18 years, Irish banks will not lend to people at the mortgage rate to pay for their education
7) You will not be able to borrow elsewhere at a reasonable rate to pay for their education.
If all of these things happen, and they all have to happen for you to be right, you can come back in 18 years and tell us "I told you so".
But even then you would be wrong. Because while all these events might have happened for you, for most other people making the decision today, one or other of the 7 events will not have happened, which would mean that they would have been better off paying down their mortgage today.
Brendan