Do we keep overpaying although facing redundancy?

N

nest egg

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Are we crazy to continue to overpay our mortgage when redundancy is on the cards?

Outstanding balance of ~326k (€1m home) locked in for 7 yrs at 1.95%. Max overpayment is €35k this year without penalty, have already made one overpayment of €17.5k. Both 40 y.o, two earners, two young kids.

Our original goal was to clear the mortgage by the time the fixed rate ended. Alas it looks like redundancy looms for me, although the silver lining would be a sizeable lump sum (~250k). We have an additional 75k in savings & investments to add to this "war chest".

Feel we're in a comfortable enough position, despite the uncertain outlook, to make a remaining €17.5k overpayment before the year end. We could clear the mortgage entirely if redundancy comes to pass, and if it doesn't, we would continue with the mortgage plan uninterrupted.
 
If I'm in your shoe, I'd be paying the 17.5K before end of year. Your savings seems to be enough.

If redundancy do happen, i'd look at penalty cost to pay it all off (This seems to be what you want to do) versus paying 35K every year (Or less if it is a percentage basis), compare the interest you will pay over the 7 years. See which one make sense on paper.

No point of clearing it off all in one go if the penalty is working out to be more than interest you will be paying by overpaying over 7 years
 
nest egg

You need to do a money makeover and provide all the information.

But the key issues for you will be how long it will take you to get a new job and what salary you will be on.

If you clear your mortgage, you will dramatically reduce your monthly outgoings and will probably be able to survive on one salary.

But without all the facts, no one can give you a more fine-tuned answer.

Brendan
 
Last edited by a moderator:
Brendan Burgess said:
nest egg

You need to do a money makeover and provide all the information.

But the key issues for you will be how long it will take you to get a new job and what salary you will be on.

If you clear your mortgage, you will dramatically reduce your monthly outgoings and will probably be able to survive on one salary.

But without all the facts, no one can give you a more fine-tuned answer.

Brendan
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Thanks for the feedback. I'll do a post once the redundancy situation is clearer.
 
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