# Part Capital and Interest Arrangement



## james-jones (10 Oct 2013)

Hi

I have 242000 remaining on my PTSB mortgage and the bank has asked me to consider a long term payment solution (*Part Capital and Interest Arrangement) *as I was finding it difficult to pay back the full monthly amount of 1575.00

The remainder of my mortgage is 18.5 years and they have suggested that I pay back the interest 804.00 (4.34%) and part of the capital (400.00) and what remains at the end of the 18.5 years is what I will owe them.

How do I calculate what will remain of the capital after the 18.5 years of paying 1200 each month.

I appreciate any help with this as I can not find any such calculators on-line

Thanks


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## orka (10 Oct 2013)

Starting with 242K outstanding, an interest rate of 4.34% pa and a 1,200 monthly repayment, I get an outstanding balance after 18.5 years (222 months) of just under 127K. 

Not sure if your initial interest/capital split is correct ~ at 4.34% pa on 242K, interest is 860-ish per month so you will only be repaying 340 capital per month at the start - but as your balance decreases you will be repaying more and more capital each month.

Repaying 1,200 per month will clear the loan after 29.5 years.


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## james-jones (10 Oct 2013)

*Concerning*

Thanks for the reply, it is very concerning that I would be left to pay 127k after the 18.5 years.

I will have to check if they will offer a split mortgage, because if I can warehouse 60k at 0% and pay of the capital and interest of the 180k at 4.34% then the monthly payment will be 1200 the same as the part capital.

Thanks for your help, any advice is welcome


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## Brendan Burgess (10 Oct 2013)

james-jones said:


> Thanks for the reply, it is very concerning that I would be left to pay 127k after the 18.5 years.



You shouldn't be overly concerned about what happens in 18.5 years.

You are struggling at the moment. Don't scrimp and save so that you pay off your mortgage according to some schedule agreed some years ago when your circumstances were different. 

ptsb are extending the term to 30 years. If your circumstances improve in the meantime, you can up your repayments and reduce the term. 

Brendan


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## james-jones (11 Oct 2013)

My problem is that I am 44, so will be at retirement age in 21 years so extending the term of the mortgage beyond 21 years is a scary thought as I will not have any income to pay it off.


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## orka (11 Oct 2013)

As Brendan said, don't panic about the long term - you have a shortish term solution that will give you some breathing space.  Hopefully your circumstances will improve over time as we get out of recession and there may be opportunities to increase your repayments - the 1200 is more than covering interest so any extra payments will go straight to repaying capital.  

Just as an example, if you pay the 1,200 per month for five years and then increase payments by 5% each year (so 1,260 per month in year 6, 1,323 in year 7 etc.), you would pay off the loan in just over 19 years (230 months).  If you increase by 3.5% each year after year 5 (1,242 in year 6, 1,283 in year 7 etc.), you would have the loan repaid in 21 years time when you will be 65.   Salaries/taxes won't be at 2013 levels in 5/10/20 years time but your mortgage amount is fixed - inflation should be your friend.


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## cremeegg (15 Oct 2013)

orka said:


> Salaries/taxes won't be at 2013 levels in 5/10/20 years time but your mortgage amount is fixed - inflation should be your friend.



Okra, You still have the inflation mind set. The economic culture in the ascendant in Europe is dead set against inflation. Inflation is likely to be very subdued in the coming years. Japan proves that inflation is not inevitable.

As for taxes, we are borrowing e1bn a month, future taxes will have to fund future state spending and service this debt.

Sorry OP but that 242,000 mountain is not going away


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## james-jones (3 Nov 2013)

Hi

PTSB have offered me a split mortgage, after a period of 6 months.  They would not give much information on the split but that they did say they would extend the length of the mortgage by 2 years and warehouse 83.5000 at 0% interest rate (but the interest rate is variable and can change).

To me this seems like an OK deal.

Is it?, or am I missing something.

Thanks


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## Luternau (3 Nov 2013)

Looks like a good outcome. 

83k warehoused is more than the 60k you were looking for so that should be a bonus.  I dont think they will formalise a fixed period of time for 0% interest on this, as doing so prevents them from adjusting it should your circumstances improve. In any event any period interest free helps you pay down the non-warehoused amount. 

Did they state how long the split arrangement was for? And what the rate would be on the non-warehoused amount?


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## james-jones (3 Nov 2013)

The split will last for the length of the mortgage (20.5 years).  The rate for the non-warehouse part is the current rate of 4.34%.

Thanks


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## Luternau (3 Nov 2013)

Earlier you were concerned about not having it all paid off by 65-does this still concern you?  You have to be happy with the current arrangement and know what it may mean for you at the end of the arrangement.


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