Overpaying mortgage advice

T

tomo69

Registered User
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Hi all,
I have a mortgage of 254,000 with 25 years remaining with Ulster bank. I have just just fixed with them for 2 years bringing my payments down to 990 from 1145 euro per month( after TRS ) Would it be worth my while paying the 155 euro saving off the mortgage each month extra or should I save the money and pay a lump some off the mortgage after the 2 years. Or is this extra payment going to make any dent on the morgage?, ps i could prob stretch to paying extra 200 euro a month. Any advice would be greatly appreciated
 
The overpayment will certainly make a dent as it comes off the capital, reducing future interest and thus payments. However I think most would advise against over paying when interest rates are so low if there is anything better you can do with the money (any debt over >2.3% interest, pension payments, investments >2.3% returns etc.). Also by holding onto that money it gives you a cushion if rates increase or something happens in your life, whereas overpaying and having less savings could leave you in a sticky situation trying the pay that mortgage.
 
If you pay 155 monthly rather than at the end, you'll save the princely sum of 89 euro in interest over 2 years.

Over 24 months you'll have paid an extra 3720 off your balance, so you'll have taken 3 or 4 months off the term. Paying it monthly will prevent you spending it on something else!

When it comes to mortgages, even small amounts being overpaid regularly will have an impact eventually.
 
Seems to me id be better off saving that money and having it as just in case money, I can have it as back up and pay a lump sum if the situtation suits us.I dont really see any great benefit paying it back, have two very young kids so I gotta think about them to .
 
You can't pay it now as you've a fixed rate. It is good to have some savings and it's also good to put this money aside and pay it off as a lump sum off the capital in 2 years. What is the property worth and what are your ages. It's almost meaningless as a question if posters don't give us more of a context. Try the money makeover option.

Taking time off a mortgage is generally always a good idea for those that have high mortgages to value, are in precarious employment and who will spend the money on something that they will have nothing to show for it. Even in scenariors where one is on a very cheap tracker etc.
 
RedOnion said:
He's with Ulster Bank. He can overpay up to 10% of the balance each year without 'breaking' his fixed rate.
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Well then he should overpay and bring down the mortgage term. After he has built up a nest egg. Something like 3 or 6 months mortgage repayments.
 
Bronte said:
Well then he should overpay and bring down the mortgage term.
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One should never bring down the mortgage term. Leave the term the same and bring down the contractual repayments. He can then continue to overpay at his sole discretion.

If at some stage in the future, he needs money, he can stop the overpayments and will have much lower repayments. If he brings down the term, the contractual repayments will remain high.

"Overpaying my mortgage - should I reduce the term or the monthly repayment?"

Brendan
 
Sorry BB. Yes you are correct. That's a much better idea.

And that linked thread is excellent.
 
Equity of circa 50K with end date at age 60. That's quite good. You'll be glad of that in later life if one of you loses a job as happens to many people who least expect it.
 
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