Cost of reducing term of mortgage

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padraig38

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Calling all maths wizards??

I have a balance of 65,500 on my tracker mortgage, due to expire in April 2020, my current monthly repayment costs 578.54 based on the tracker rate of 1.6% (margin of .6% over ECB rate).

I want to reduce the term of my mortgage by exactly 5 years without reducing monthly repayments.

How much of a lump sum repayment should this cost me?

The reason i ask is that my bank, AIB, have given me several different figures ranging between 21,000 when i enquired 12 months ago to 25,000 and 27,000 when i rang them in dublin last week and 31,000 when i asked at my local branch yesterday.

Please can anyone independent give me the correct figure?

I made a similiar over repayment of € 32,000 in mid July 2006 which knocked 8 and half years of term.

Am i right in thinking that the further i am into my mortgage the more expensive it is to reduce the term?
 
I have worked out that a lump sum of 29000 would reduce your term down to 6 years from the current 11. Don't take this as 100% definite - hopefully someone else will provide a figure too that is close to this.
 
padraig38, the figures you give do not add up for me.

Paying off 65,500 over 131 months at 1.6% per annum should be costing you 545 a month not 578. This is a large discrepancy; either the balance, the rate or the end date you gave is not right. I can't go any further answering your first question until this is cleared up.

Regarding your second question - the cost of reducing the term also depends on the prevailing interest rates; the higher the interest rate the more the reduction as you are saving more interest by paying off the same amount of capital early.
 
I'd say your current repayments were last calculated at ECB = 1.5%.

At that level of payment per month, till April 2015, you'd pay off a mortgage of €38,500 meaning you should pay down about €27k now.

Assuming ECB of 1% you should probably pay off €26.5k now
 
maybe you should use the correct ecb rate of 1.25%
which would make your rate 1.85%
 
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