fixed term/tracker mortgage

i'm coming to the end of a 3year fixed term. called my bank and they told me i will be rolling onto some tracker at 1.25% above the ECB, which i think means my new rate will be 2.25%. this is a relief as i have been on a fairly higher rate for the 3 years. one mortgage calculator i tried showed savings of 350-400 Euro per month.

the mortgage is over 35 years which i'd like to reduce the term by 10 or 15 years, so the saving/difference in monthly payments i'd be willing to continue paying only it's over a shorter term(does that make sense??). can i do this?? if i want to reduce it by these amount of years, does it mean that i will no longer have the tracker and have to sign up for another fixed term and higher rate??

currently - 1150 35 years
new - 750 35 years
i'd like to pay 1150 for 20-25 years

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thank you

Your bank should have no problem with you paying in the extra to reduce the term of your mortgage.

Have you considered putting the extra money into savings at a good rate. You would then have the benefit of a rainy day fund at no cost (possibly get even more than 2.25%) and if this is not needed you could pay off the mortgage in lump sum installments.

Yep. You should be able to pay additional money each month and have the bank apply the extra portion of the payment towards your principal. Typically paying in the equivalent of about 1 additional payment per year can help you pay off the mortgage 8-10 years sooner.

dogfish said:

Your bank should have no problem with you paying in the extra to reduce the term of your mortgage.

Have you considered putting the extra money into savings at a good rate. You would then have the benefit of a rainy day fund at no cost (possibly get even more than 2.25%) and if this is not needed you could pay off the mortgage in lump sum installments.

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thanks for the response
i'm about to come to the end of payments on my one and only loan (mortgage aside) and my intention is to use the money i've been putting towards that into a savings plan. i've started a Rabo Direct savings scheme and unsure whether to stick with that and put the extra money in there, or open a new savings plan aside from that.

that said, regarding the overall mortgage, loan and savings, i'm at a bit of a dilemma and unsure what route to take with it. i'll start a new thread about it as this one is meant to be about the interest rates re mortgage.

FHA Loan said:

Yep. You should be able to pay additional money each month and have the bank apply the extra portion of the payment towards your principal. Typically paying in the equivalent of about 1 additional payment per year can help you pay off the mortgage 8-10 years sooner.

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do i have to ask the bank to just put the extra payment forward to the principal amount or will they do it as standard. to hear you say that one additional paymeny per year can take so many years off the mortgage really is music to my ears.

Put it in writing to the bank that you want the extra applied directly to the capital. Otherwise, they will more than likely put it towards the interest.

Tracker or Fixed Rate?

We've been on a fixed rate mortgage (€162,500 at 5.95% over 35 years) with BOI for the last two years and it's coming time to rearrange the terms.We have been given the following options:

Tracker + 1.35% >€500k &LTV>80% rate 2.350%
Existing Variable LTV rate PDH 3.200%
2 yr Fixed (PDH) rate 3.500%
3 yr Fixed rate 3.950%
5 yr Fixed (PDH) rate 4.750%

Can anyone advise on which option would be the best to go with as it all seems a bit of a minfield?

Moved from Mortgage Arrears, Personal debt & Negative equity
to Mortgages.

Please post in the correct forum/subforum.