Lump sum of Mortgage???

[Unregistered]

I currently have a 20 years mortgage with bank of ireland. I am thinking of paying a lump sum of 20,000 euros of the total mortgage.

What would you do?

Also I am thinking of moving my mortgage from bank of ireland to first active.

By putting in figures on the First Active Calculator, I could have my mortgage paid off in 5 years.

It is the current account first active mortgage that I would be interested in.

Has anyone taken up this first active mortgage and if so, are you saving money on the interest repayments?

Looking forward to you reply(s).

 

[ClubMan]

I currently have a 20 years mortgage with bank of ireland. I am thinking of paying a lump sum of 20,000 euros of the total mortgage.

What would you do?

Impossible to say without more detailed information about your overall financial/personal situation. If you have other higher cost debts then you should consider clearing/reducing these first before tackling the lower cost mortgage loan. If you might need to 20K soon for some other reason then it might be better to hold onto it for that rather than locking it away as equity in your home. Otherwise reducing the mortgage loan might be a good way to get a guaranteed "return" on your money in the form of interest costs that you would otherwise avoid. On the other hand some people might argue that while it generally doesn't make sense to maintain savings/investments while servicing debts this rule is not so hard and fast when it comes to (currently) low cost credit such as mortgage loans. In short - no simple answer.

Your alternative plan of keeping the lump sum available while offsetting it against the mortgage through an offset/current account loan might be a good halfway house. But make sure that such a loan is still competitive and you are not paying a premium just for the privilege of being able to avail of an offset/current account mortgage setup.