# Will I lose my tracker if I pay off a lump sum



## Johnpfitz (19 Mar 2013)

I am hoping to pay off 1/3 of my mortgage by paying the bank a lump sum.

By doing this I hope that our monthly repayment would decrease significantly. Is that the case ?

Also, I presume I am entitled to keep my tracker [as the agreement 
wont have changed]????

Any advise greatly appreciated


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## wbbs (19 Mar 2013)

Normally should have no effect on the rate as it is variable and lump sum payments are usually allowed.

You can usually ask to decrease either the term or the monthly repayment, ask bank for what the revised figures will be.  I would be inclined to decrease the repayment and then overpay if you wanted, will save you hassle of trying to increase term again should your circumstances change.  It will still be cleared early if you pay the increased repayments.


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## PadKiss (19 Mar 2013)

Hi John P As per a previous thread I would advise to invest the third of the mortgage or your savings (so to speak) into An Post and earn 7% tax free after 3 years or 15% after 5 years this is a greater return than the current cost of your tracker mortgage so it makes no sense to clear any extra portion of your mortgage other than what is being repaid over the normal course of time. If interest rates change and start to go up then that is a diffferent debate. Good Luck Padraic


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## wbbs (19 Mar 2013)

Good advice normally re savings rates etc but what if Govt decides to pinch a bit of our savings?  Bet there is people in Cyprus who wish they had paid their savings off their mortgage!


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## WizardDr (19 Mar 2013)

@wbbs under the Consumer Credit Act there can be no penalty for repaying a variable rate mortgage early. Clearly if your lender attempted to remove the tracker, it is hard to see how this could not be seen as a penalty.

Incidentally - the shaving off private pensions here in 2010 is it not directly comparable to Cyprus levy on savings?


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## Johnpfitz (19 Mar 2013)

Thank you all for good advice. I can see the logic of investing the money and sticking to agreed payments...I have a some maths to do before deciding... thanks again


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## Brendan Burgess (19 Mar 2013)

HI John

I have done a Key Post  Should I use a lump sum to reduce my mortgage? 

Who is your lender?  BoS or IBRC might give a discount for early repayment.  

If you do repay it early 
1) Ask them to treat it as a payment in advance, so that you can take a long payment holiday if you want it. 
2) If they won't do that, do as wbbs says.  Leave the term constant, but overpay your mortgage. That is the most flexible. 

Brendan


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## Gerry Canning (19 Mar 2013)

WizardDr said:


> @wbbs under the Consumer Credit Act there can be no penalty for repaying a variable rate mortgage early. Clearly if your lender attempted to remove the tracker, it is hard to see how this could not be seen as a penalty.
> 
> Incidentally - the shaving off private pensions here in 2010 is it not directly comparable to Cyprus levy on savings?


 ...................
Wizard DR, You are correct , our {leaders} have done a Cyprus on pension funds.Then also Add on ,that it now takes 22,000 saved to get 1,000 pension when it used to be 15,000 saved to get 1,000 pension. 
We have been neatly hammered !!!


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## dodo (5 Apr 2013)

Maybe ask them will they give you some sort of deal if paying a lump, eg you paying 50K maybe they give you another 5% of, as if on a tracker they want you to pay of tracker as quick as you can if on a good rate, eg .05 above ECB,
or maybe ask them what deals they have on savings and then try lead them towards any deals with mortgage lump, don't ask don't get, banks I think may start to look at this options in general when they take their heads out of the sand,
But I know why you may want to pay lump some off as proposed to investing in post office etc,  as you know the mortgage is lower and money gone so no chance in buying new car etc when saving scheme up, I have heard to many stories where people have do this,   also if you pay lump sum off if possible try keep payments the same as this will save you much more mon ey in the long run than any saving scheme,


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## Johnpfitz (17 Apr 2013)

Hi Brendan,
I have been advised by my local PTSB [Who have my Mortgage] advisor to
pay off the lump sum and reduce the term of the mortgage from 35 to 25 [leaving me 
an 18 year mortgage]..He says that my monthly repayment will remain the same but the  interest savings in reducing the term will be more beneficial to me. Is he being straight with me in his assertion ?

I would have preffered to reduce the monthly burden of the repayments [which are big because of interest only periods and reduced repayments i have been on in the past] to ease our outgoings at his point.

Interested to hear your take on this.

thanks


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## PadKiss (17 Apr 2013)

Hi John
A few key questions
Is this a RIP or Home Loan
Why change the term
Look at the alternatives to paying the lump sum
In your comment it seems you have had some difficulty in meeting the terms of this mortgage in the past by shortening the term now you will automatically increase the chances of this happening again as you will be committing to increasing the monthly cost and what if rates move upwards do you think your local PTSB 'advisor' will allow you to extend the term. My advice is leave the term as is and pay off any lump sums as you have them. However wait until the interest rates start to go up as you are on tracker and your lump sum can make more than its costing in a mortgage. If however you do not have the discipline to put the lump sum aside then pay it off the loan. If you do have the descipline keep your money for the present. Think if ECB cuts rates in May you will get an (assumed) .25% reduction while enjoyimg the return on your lump sum. I would not agree with the paying off of a lump sum without at the very least getting some incentive from the lender to do so and not go with the advice you have got from them to date. Padraic


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## Dermot (17 Apr 2013)

I would strongly support the view of keeping the mortgage as it is ie 35 years but reducing the repayments to what ever amount you are comfortable with. This does not mean that you need to pay in all your lump sum.  
The longer term will give you more flexibility into the future and you can always pay more into it from time thereby reducing the monthly repayment.
I appreciate that there is a possibility of a tracker rate reduction in the next couple of month but with effect from 1st Jan next year you have an increased dirt rate and prsi payments on interest and more than likely lower deposit rates.
In that scenario it is getting close to whether it is really worth keeping money on deposit or paying off your tracker.


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## Johnpfitz (30 Apr 2013)

thanks all for very useful advice


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