# What are people doing with mortgage interest 'savings'?



## rmelly (18 Jan 2009)

Given that many people who have mortgages have experienced significant cuts in their monthly repayments over the last 3 months, what are people doing with this money? e.g. saving, rainy day fund, mortgage overpayments, repaying/overpaying other debts (e.g. car loan, CC or overdraft), lifestyle spending, new car loan?

Obviously some has been neated by the income tax levy and for a growing number of people the benefit has been cancelled out by pay cuts, job loss, loss of a second income, or it may have been negated by other increases e.g. gas/electricity, health insurance etc.


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## truthseeker (18 Jan 2009)

Savings - although I have considered just paying it into mortgage acc and letting it build up there so that there are 'emergency' payments available in that account - mind you if its in savings its stil accessible to me for emergency usage anyway so six of one and half a dozen of the other.

I suppose the key here is - Im not spending it.


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## Kiddo (18 Jan 2009)

We had started to overpay each month before the cuts. We have left the repayments at pre cut rate so chipping away faster at the capital. Had considered making a lump sum payment too but decided against it as we'd rather have access to cash if needed.

No debts apart from mortgage.


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## Nutso (18 Jan 2009)

We have kept our repayments the same so hope to overpay but might do as others are and just keep it in the account in case of any problems.  It still reduces the interest so has a benefit.


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## mrsg09 (19 Jan 2009)

we took the first two decreases and put additional money into savings, the next two we didnt take and reduced the term of the mortgage instead.

we have no loans other than mortgage


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## Diziet (19 Jan 2009)

Tracker mortgage is now at 3%, Northern Rock savings are at 5%. The reduction is of course going straight into savings. I did think of reducing the term, but the numbers do not stack up for that at present; it is more effective to put it into savings. The key is that the money is being saved, not spent!


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## gipimann (19 Jan 2009)

Sadly the change in TRS ate up the 0.75% reduction, and the 1% income levy has spoken for the other 2 reductions so far, so I haven't got anything more to play with.....

(by the way I'm not a high earner, I've got a low mortgage!)


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## jimbobman (19 Jan 2009)

gipimann how did the change in TRS affect you. i thought it was going up, not down


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## gipimann (19 Jan 2009)

I'm not a first time buyer, so TRS was reduced from 20% to 15% for me.   I am in year 4 of a 20 year mortgage, so there is still an interest element in my repayments (standard variable mortgage).


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## anon473 (19 Jan 2009)

What are we doing with the savings?
Maynard Keynesian spending. Its the best thing for the economy 
(except we've been spending in Belfast - oops)
anon473


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## kkontour (19 Jan 2009)

ECB + .7% tracker.
Overpaying our mortgage for the past year,  The rate cuts go straght off the capital.
2 years into a 35yr mortgage.
If we can keep going ae we are we will be mortgage free in 14yrs.


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## mrsg09 (20 Jan 2009)

kkontour youve shaved 19 years off your morgtage in the last few months??!!


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## j26 (20 Jan 2009)

Once the last cut feeds through I''m setting up an overpayment on the mortgage.  It's an opportunity to reduce the term of the mortgage significanty that can't be ignored.


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## mrsg09 (20 Jan 2009)

diziet

Are savers not charged dirt of about 20% on any interest earned in the northern rock account?

this would reduce interest on the savings account to about 4%


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## Don_08 (20 Jan 2009)

Mortgage now at 2.45%.  Extra repayments going into 8.0% a/c with Anglo ( how long that rate will last for not sure!) - once net mortgage interest goes above any net savings rate we can get we'll transfer savings into the mortgage.


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## mrsg09 (20 Jan 2009)

don 08
interesting

i never considered saving the money like this and then injecting into the mortgage, i thought we were doing the right thing increasing capital payments on the mortgage


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## PaddyW (20 Jan 2009)

mrsg09, it's 23% DIRT now so reducing it to 3.85% I think.


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## Don_08 (20 Jan 2009)

mrsg09 said:


> don 08
> interesting
> 
> i never considered saving the money like this and then injecting into the mortgage, i thought we were doing the right thing increasing capital payments on the mortgage


 
If your savings interest rate ( net of tax) is greater than your mortgage interest rate ( net of TRS) , then savings and lump sum injection would be the best way to go.   You will also have the safety of a lump sum you can access easier than equity release on a mortgage in case of unforseen circumstances.  But it does not make sense from monetary prospective unless the interest rates are the right way around.


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## mrsg09 (20 Jan 2009)

our interest rate is currently .59% over ECB

so it would be easy enough to find a savings account with interest rate greater wouldnt it?

thanks for your advise, i thought we were doing the right thing reducing the term, 

thanks again


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## Don_08 (20 Jan 2009)

Thats a very good mortgage rate.  There is nothing right or wrong!!  At least its going towards something.  

Just means you are effectively saving at 1.94% net ( assuming 25% TRS relief),  when you could be getting 6.16% net with Anglo ( 8% with 23% DIRT)  or check the other best buys regular savers.  Something with flexibility on how much you put in every month ideally.

Every little helps!!

We're on discounted tracker of + 0.45% until Sep 09 - so would hope to get the extra savings until Sep at least.  We'll keep an eye on it anyway.


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## mrsg09 (20 Jan 2009)

don, we were haunted to get tthe rate, counting our lucky stars, only moved house during the summer and wont be moving again so its great.

thanks for all the advise, just printed off anglo application there so all systems go


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## D8Lady (20 Jan 2009)

Paying off overdraft, then beefing up savings.


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## tommygirl (23 Jan 2009)

From replies below, we also would be better off saving and then paying a lump sum towards the mortgage at a later date.
Am a bit clueless but there is a parent saver account with AIB that is currently offering 8.75% on a monthly saver account. It is guaranteed to be ECB + 6% until May 09 & then ECB + 4% until May 2010. You can save 200/month but each 'child' can have 4 accounts. At the end of the year the lump sum you have saved is transferred into an account that currently earns 1.75%
We kept our mortgage repayments the same as before the interest rate cuts so that effectively reduced the term by 6 years. Our variable interest rate is 3.75% so I think we would be better off extending the term of the mortgage back out to 30 years and saving as much as possible for the year and then we can put that into the mortgage. I think we are also getting less TRS (as first-time buyers) as we are reducing our loan at a faster rate.
Am I right in thinking this??
Thanks


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## Mpsox (23 Jan 2009)

using it to pay off the mortgage capital,


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## hokey32 (23 Jan 2009)

The 10% pay cut I've had to take in work pretty much equals the reduction in mortgage payments so nothing to play around with!


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## so-crates (24 Jan 2009)

Was overpaying anyway so decided to put it towards savings, thinking about buying a car and I'd rather not borrow for it so have earmarked some savings for that and it is going into there...

Of course not last month cos I think I spent it all (and some) on dresses


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## rmelly (24 Jan 2009)

so-crates said:


> Of course not last month cos I think I spent it all (and some) on dresses


 
I'm hoping you're female...for your sake.


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## so-crates (24 Jan 2009)

for your peace of mind rmelly - yes I am


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## so-crates (24 Jan 2009)

and I am going to guess you aren't?


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## rmelly (25 Jan 2009)

so-crates said:


> and I am going to guess you aren't?


 
I hope so


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## dockingtrade (30 Jan 2009)

no debts other than mortgage, so takin gthe surplus of the principle, then found out im be made redundant soon so  reducing the payment to exactly the amount due and saving like a ...


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## so-crates (30 Jan 2009)

rmelly said:


> I hope so



If you don't know at this stage use your mortgage payment saving to get your doctor to check


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## Vanilla (31 Jan 2009)

so-crates said:


> Of course not last month cos I think I spent it all (and some) on dresses


 

And now all the new Spring/Summer collections are out!


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## rmelly (31 Jan 2009)

so-crates said:


> If you don't know at this stage use your mortgage payment saving to get your doctor to check


 
Read you post, then read mine again.


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## so-crates (31 Jan 2009)

Vanilla said:


> And now all the new Spring/Summer collections are out!


 
 too true but I will be a model of restraint



rmelly said:


> Read you post, then read mine again.


You used the word "hope" though  ... not the most definite of words


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## rmelly (31 Jan 2009)

so-crates said:


> too true but I will be a model of restraint
> 
> 
> You used the word "hope" though  ... not the most definite of words


 
meaning I hope you guess that I am male. Not being you, or knowing you, and not knowing what you do or don't know about me, I can't say what you will or will not guess. sorry.


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## MandaC (31 Jan 2009)

I was just thinking about this the other day when I got another letter reducing my mortgage.  Mine has dropped over €225 in about six months and it was not massive to begin with.

Unfortunately, I have squandered any savings to date, so as and from Monday am going to fix it at the old rate as I just take all of my savings/bills etc out and just spend the difference.


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## Vanilla (31 Jan 2009)

Apparently principles, topshop, oasis, next etc are all accepting online orders and delivering to Ireland now too. Not that that's remotely relevant, of course.


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## rmelly (31 Jan 2009)

Vanilla said:


> Apparently principles, topshop, oasis, next etc are all accepting online orders and delivering to Ireland now too. Not that that's remotely relevant, of course.


 
and don't forget all the gadget sites


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## Vanilla (31 Jan 2009)

rmelly said:


> and don't forget all the gadget sites


 

Indeed, also irrelevant.


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## rmelly (31 Jan 2009)

Vanilla said:


> Indeed, also irrelevant.


 
utterly


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## so-crates (2 Feb 2009)

rmelly said:


> meaning I hope you guess that I am male. Not being you, or knowing you, and not knowing what you do or don't know about me, I can't say what you will or will not guess. sorry.


 
Ah, apologies, all clear now.


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## sulo (11 Feb 2009)

We are now at the tracker rate we were first given by the bank - so we are delighted to be in the same position as 3 years ago!

We've just built the cash up over the years (always overpaid) - but I was too lazy to get the cash saved into a higher interest account... we'll be spending it soon! (on our wedding).


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## VOR (12 Feb 2009)

On .6 tracker. Set rate back in late July after last rate increase. Mortgage down to 18 years from 30.


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