Is it possible to save money by paying lump sum at the exact juncture of switching mortgages?

thanks, I'll check out Avant.
I'll start the switch process v soon as the fixed rate is up in the summer. I started it 3 years ago in the summer. Currently with kbc so I'll have to do something soon anyway. 1.95% would be better for sure.

I had thought that taking out less of a loan would be better than taking a bigger loan and then repaying it.

I also thought if I got a better rate after switching this time my €20k lump sum would go further than paying it off now before switching - am almost ashamed to reveal my financial thought processes at this stage!
 
Carmoney said:
I had thought that taking out less of a loan would be better than taking a bigger loan and then repaying it.

I also thought if I got a better rate after switching this time my €20k lump sum would go further than paying it off now before switching - am almost ashamed to reveal my financial thought processes at this stage!
Click to expand...
Financially, i.e., from a purely numerical point of view, it doesn't matter if you pay off a lump sum just before or just after you switch. But note the following practicalities:
  1. If paying off the lump sum makes you eligible for a lower LTV bracket, you should pay it off before the switch. This does not apply in your case because you are already below 60% LTV.
  2. Switching and then paying off the lump sum could mean that you have to pay a break fee to the new lender if interest rates move against you. This does not apply in your case if you switch to Avant because they allow you to overpay up to 10% of the balance (about €20k in your case) without you incurring a break fee.
Get switching before the end of March so that you get the €1,500 cashback from Avant (provided you use a broker who is an Avant "Gold Partner").

As for whether or not you should pay off a lump sum, make sure that you first have an emergency fund (3 to 6 months' living expenses if you lost your jobs). And after that, consider whether the money would be better topping up your pension or reducing your mortgage. (Pension contributions attract big tax relief.)
 
Your €20k goes furthest the sooner you pay it off the mortgage. I don't really understand why you seem to think that it's more complicated than that and you need to do things and time them in some specific order. I think that's what Brendan wanted to tease out with you and understand better because maybe there's some common fallacy here that could be addressed...
 
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