Lumpsum off mortgage, before interest rate changes?

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Freefromrona

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Mortgage €115,000.00.

Fixed interest rate of 2.9% due to end soon. Option to fix again at same rate for 1 or 2 years. Variable rate being offered is 4.2%.

I have €5000 saved that I don't need.

Should I pay the €5000 off the actual mortgage or increase the repayments and fix for the year or two? Is one option better for repaying sooner/reducing term?

I will be selling in the next 2 years but would like to pay as much as I can off the mortgage now.

Any advice appreciated.
 
If you pay €5,000 off your mortgage early, you will save 2.9% for a year, €1,450

If you pay €400 off it, you will save 1/12th of it.

So, yes, you should pay it all off now.

Brendan
 
Brendan Burgess said:
If you pay €5,000 off your mortgage early, you will save 2.9% for a year, €1,450
Click to expand...
Can you explain this please?
Where does the €1,450 saving come from?

I calculate that €5,000 @ 2.9% = €145.
Alternatively, €115k @ 2.9% = €3,335 vs €110k @ 2.9% = €3,190 - the difference again being €145.

What am I missing?
 
Brendan got his maths wrong. His figures are based on a lump sum of €50,000. Your lump sum is €5,000. Your figures are correct.
 
OP - Just to be clear.

The answer is still the same. Paying off money earlier saves you more money than paying it off later.

Brendan
 
Thanks for your replies.

I am hoping that BOI will allow me to pay the €5000 at the end of the fixed rate term without charging me for that as I am still in a fixed rate.

I just wasn't sure to pay it off the mortgage or the interest rate when current rate expires and before I renew as I thought 1 was different to the other in relation to the end term/length of payment.

Hope my post makes sense.
 
You can pay it off today.
Ask them what the break fee for €5,000 will be. It is likely to be very small.

And when the Fixed Rate is up, you can pay it off anyway without penalty as long as you haven't already fixed it for another period.

Brendan
 
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