# How to calculate effect of paying lump sum off mortgage



## grotty (28 Aug 2006)

Hi, I am thinking of putting 30K off my mortgage and increasing my payments a little. Is there a calculator out there that will let you see how this would effect the the term of my mortgage? I am with EBS and have a variable mortgage over 30 year.

Thanks,
Grotty


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## Satanta (28 Aug 2006)

Jeacle Mortgage Calculator

Input your details and then mess around with increased payments and lump sums to see how much saving can be achieved. Also look at switching your payments to bi-weekly (same outgoings per month, just at slightly different timings) and see what further savings you can achieve.


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## kramer2006 (28 Aug 2006)

There is a simple overpayment calculator on the Bank of Ireland website:

[broken link removed]

None of the lending institutions seem keen on providing lump sum savings calculators. Nevertheless, I've recently enquired about overpayment/lump sum payment in order to reduce my term/interest and the savings are staggering.

Best of luck getting your mortgage under control. Too many people out there with CRAZY mortgages these days.


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## irishpancake (28 Aug 2006)

> Also look at switching your payments to bi-weekly (same outgoings per month, just at slightly different timings)



Don't really think that is always true in the case of fortnightly payments, it's not just timing, but also actual additional payments, 

e.g. 12 x 1000 = 12000 p/year    26 x 500 = 13000

painless extraction of an extra 1000 p/y.


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## Satanta (28 Aug 2006)

irishpancake said:


> Don't really think that is always true in the case of fortnightly payments, it's not just timing, but also actual additional payments



Hadn't spotted this before, but it does appear to be the case.

I had assumed the bi-weekly payments would actually be twice monthly (15th of the month and final day of the month for example) giving 24 payments per year. 

Looking through the Jeacle breakdown of payments (before this I only ever checked the first page which covers the period from Aug to December, and where I formed the assumption of paying twice a month vs. fortnightly) it does seem that an additional (inflated) payment is made each and every January and July (when switched to bi-weekly) in order to make up the 26 (52 [weeks in a year] / 2 [for bi-weekly]) payments.

Thanks IP for pointing out the error in my logic.... (kinda an obvious one now that I look at it).


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## grotty (1 Sep 2006)

Guys that is exactly what I wanted - I am shocked at how so little of an increase can save you so much. A huge thanks !


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## Henny Penny (2 Sep 2006)

We are with AIB .. . Mr. HP is paid weekly so we pay the mortgage weekly ... not all banks do it, but we reckon it's saving us about 4 years on our mortgage in total.


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## JoeB (2 Sep 2006)

One way of looking at lump sum payments is that if you don't make it you will be paying interest on that amount for the entire duration of the mortgage, i.e making a lump sum payment of €30,000 now means that that €30,000 would have been the last €30,000 that you'd pay off (in twenty years time or whatever) and you be paying interest on the €30,000 for the twenty years.

Interest at 4% per year on €30,000 for twenty years is at least 80% of the €30,000... = €24,000... that's the minimum you'd save. (This doesn't consider compound interest which means the actual savings are greater)

Cheers
Joe


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## paddyd (2 Sep 2006)

is it just me, or is the 'one-off payment' part of http://www.jeacle.ie/mortgage/ie/ not working today? Great tool BTW


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## ClubMan (2 Sep 2006)

Seems to be working OK for me as far as I can see. What seems to be going wrong for you?


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## Sherman (3 Sep 2006)

Henny Penny said:


> We are with AIB .. . Mr. HP is paid weekly so we pay the mortgage weekly ... not all banks do it, but we reckon it's saving us about 4 years on our mortgage in total.



 That's interesting Henny Penny. Although the actual amount paid is the same as paying fortnightly (i.e. 52 weekly payments = 26 fortnightly payments), I assume you're saving a bit more interest as the money is going in weekly rather than fortnightly.  How did you set this up with your bank? Was it just a simple letter instructing them to take the mortgage out weekly?  I was going to change to fortnightly but I may see if Ptsb will allow me to do it weekly instead.


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## ClubMan (3 Sep 2006)

Before switching to more regular than monthly repayments make sure that your lender calculates interest more frequently than monthly - e.g. daily. Making repayments more frequently than interest is calculated is of no benefit to the borrower.


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## Henny Penny (3 Sep 2006)

We arranged with the bank to have the payments done weekly. You just need to inform the bank, they have forms for you to sign ... it;s not common practice, but it is possible. We decided this before we took out the mortgage in the first place ... so check with your bank.
Interest is calculated daily on our account.


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## BigM (4 Sep 2006)

If you have access to Bloomberg then BCM <GO> and then MP gives you an excellent mortgage calculator. Can prepay lump sums each year (eg bonuses in Jan/Feb) and watch the mortgage term and interest amounts fall!


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## ClubMan (4 Sep 2006)

BigM said:


> If you have access to Bloomberg


Maybe I'm wrong but I imagine that few _AAM _users have access to _Bloomberg _in which case Karl Jeacle's calculator is probably a better bet.


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## BigM (4 Sep 2006)

ClubMan said:


> Maybe I'm wrong but I imagine that few _AAM _users have access to _Bloomberg _in which case Karl Jeacle's calculator is probably a better bet.


Well a lot of posters have quoted BB or Reuters so there are some - and even if you don't have access on your own desktop a lot of (financial) offices have at least one BB terminal. But the main reason I mentioned it was because that Jeacle calculator doesn't work on my PC for some reason  .


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## ClubMan (4 Sep 2006)

Probably a _Java _runtime issue. See here.

Karl Jeacle's mortgage calculator updated


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## BigM (4 Sep 2006)

Thanks ClubMan - my IT dept won't let me download but at least I'll be able to use it at home!


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## ClubMan (4 Sep 2006)

Tell your _IT _department that they may be putting _PCs _at risk by running out of date software.


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## BigM (4 Sep 2006)

ClubMan said:


> Tell your _IT _department that they may be putting _PCs _at risk by running out of date software.


but then they might figure out I spend all my time on AAM !!


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## kramer2006 (4 Sep 2006)

All, I was having trouble using the Jeacle calculator aswell. I came across the following alternative:

http://www.moneydoctor.ie/calculators/mortgagecalculator.htm

It's the same Jeacle calculator, but it works on this website.

Incidentally, I've decided to put all of my SSIA (and some extra) into my mortgage. As a result, I'm shaving nearly 14 years off my mortgage. I'm sure there are arguments against doing this, but I feel great doing so. It's a psychological thing, I now feel like I will have my mortgage "under control".

K.


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## ClubMan (4 Sep 2006)

That version works because it's older than the version on _Karl's _website which requires a more up to date _Java _runtime.


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## ClubMan (4 Sep 2006)

kramer2006 said:


> As a result, I'm shaving nearly 14 years off my mortgage. I'm sure there are arguments against doing this, but I feel great doing so. It's a psychological thing, I now feel like I will have my mortgage "under control".


Nothing at all wrong with that as long as you don't need the money for anything else, you don't have higher cost debts outstanding and you won't end up clearing your mortgage early only to borrow at a higher rate (e.g. unsecured loans).


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## kramer2006 (4 Sep 2006)

Thankfully I don't. With the recent (and future) rises in interest rates, it seems like the prudent move.


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