Best time to pay down your mortgage

Wouldn't this be a good time to take money off deposit and pay down some or all of a mortgage if you could?

This is chiefly because of the uncertainty in the country and uncertainty about Irish banks, owning all or some of your home might be a good use of money. Also if people are facing pay cuts etc. they will have extra income each month to offset this?

It's an interesting point. I have discussed the general issues around the payment of a lump sum off your mortgage in this Key Post.

I suppose the question is - if you can get a higher return from a deposit in a bank which you are happy with than you are paying on your mortgage, then you should not pay off your mortgage.

However,it could be argued that given the general amount of uncertainty, maybe to be risk-free, just pay off your mortgage, even if you are making a "profit" on it.

I have to say that I would find it very difficult to pay off my 0.6% above ECB tracker.

Yes it's mainly due to uncertainty I suggest it, German (?) guy on Morning Ireland made a compelling case about the banks and the state being as one in markets eyes.

I have raised the fact a few times that I don't have any faith in the bank gauruntee. So depositers may flee to a/c's backed by other governments but even that's been questionned here, in this light paying down some of ones mortgage seems attractive as you live in your house and presumably the govt can't take it away! Well they can tax it I suppose.

If the uncertainty is resolved into a bad outcome, wouldn't it be better to have the flexibility of having your money available. I think so, although this may just be an emotional thing. Of course this leads to the harder question of how to keep your money safe.

Well I'm fairly convinced your money won't be available if the Irish institution you have it in goes under as the gauruntee is worthless. I've read you comments on potential legislation covering other banks and I just don't know, will those countries just roll over? Would that legislation pass the ECJ?

Then in an even worse case scenario will the euro itslef be worth much if it nosedives with problems in Spain for example

At least your house is there in bricks and mortar and you live in it and you will have less outgoings if a domesday scenario emerges.

mmclo said:

Well I'm fairly convinced your money won't be available if the Irish institution you have it in goes under as the gauruntee is worthless. I've read you comments on potential legislation covering other banks and I just don't know, will those countries just roll over? Would that legislation pass the ECJ?

Then in an even worse case scenario will the euro itslef be worth much if it nosedives with problems in Spain for example

At least your house is there in bricks and mortar and you live in it and you will have less outgoings if a domesday scenario emerges.

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I cleared my last mortgage recently and picked up the deeds today for the very same reason. Peace of mind.

The possibility of a bank failure is now only half a step away.

The bailout boys are coming to town tomorrow, if a bailout deal is agreed it may not cover the bank depositors. It probably will, but but the possibility exists that it wont. Unlike Greece, the Irish banks are bust. So unless the bailout specifically provides funds for depositors, savings will be lost.

Given our disfunctional political situation a bailout might not be agreed, then I cannot see how a bank collapse could be avoided.

If that happens a saver with a foreign owned bank and their govts support would be better off than a saver with an Irish institution, but still not a good position to be in.

Deposits abroad seem a much preferable option.

MMCLO wonders how the euro will fare. Well a Euro in your hand is a claim on the economys of the Eurozone countries, which is still worth something. The markets have driven up the value of the Euro against the Dollar and sterling (from 67p to 84p about 25%) since the crises began.

If Spain and Italy collapsed, and that is being very nervous, I suspect that either they would be forced out of the Euro, or Germany and its solvent neighbours would leave. Then a deposit in say Holland would be converted to new Dutch Kroner, which might be worth quite a bit.

Nearer in time, Ireland might be forced out of the Euro. Then at least savers in Ireland would get repaid in new Irish money, which would still buy a loaf of bread but pertol would look very expensive.

All these discussions seem to me to based on the idea that the future will be much like the past and nothing will change dramatically. Things can change dramatically.

Today Ireland has an incomparably higher standard of living than many other countries in the world. We have no automatic right to this and unless we fix our economy we will not continue to enjoy our current living standards. I will stop there before i get too philosophical

The idea of paying off your mortgage with savings might seem like a good idea, but I would rather keep some of my savings in the unfortunate case if I lost my job, the bricks & mortar are not going to put food on the table

cremeegg said:

The possibility of a bank failure is now only half a step away.

The bailout boys are coming to town tomorrow, if a bailout deal is agreed it may not cover the bank depositors. It probably will, but but the possibility exists that it wont. Unlike Greece, the Irish banks are bust. So unless the bailout specifically provides funds for depositors, savings will be lost.

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This is a very dangerous statement to be making.

You are basing this on what exactly?

There would be anarchy if all the savings in the countrys banks was wiped out.

tosullivan said:

The idea of paying off your mortgage with savings might seem like a good idea, but I would rather keep some of my savings in the unfortunate case if I lost my job, the bricks & mortar are not going to put food on the table

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To a degree, but you will effectively have an increased income of whatever your net repayments were or a reduced repayment if partial. You will also get social welafare (of course depending on your situation but let's assume JSB initially). This would be a reasonable amount for a while anyway. ALso savings would count as means if you were only entitled to a means tested soc welfare payment.

Yes alternatively you could spend down your savings but then you still have the mortgage and even a reduced payment is means tested

Of course all of this depends on individual circumstances. It also relates to non financial issues like peace of mind, risk, job security etc. I'm suggesting the balance of these changes in this unprecendented situation

RMCF said:

This is a very dangerous statement to be making.

You are basing this on what exactly?

There would be anarchy if all the savings in the countrys banks was wiped out.

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The dogs in the street are saying the banks are close to the edge.

The ECB is effetivley calling time on the permanent bail out

The Governemnt currently has no money to honour the gauruntee

See where this is going?

It is no co-incidence that the IMF and EU statments are all talking about the banks, the ECB and EU are talking about the banks, everyone is talking about the banks!

It is estimates 20bn still needed to stabilise them, if this doens't come in to the country soon one will collapse, you then have to ask can the Govt pay the deposits, where will it get the money to do this given we can only borrow at 8/9%

I think we will see a 20bn bailout linked to the banks a sort of fund that Irish CB will administer but many a slip between cup and lip. Presume ECB will stomp up til this is agreed