Maximising my Savings

R

Robbie_C

Registered User
Messages
22
Hi,

Here is my current dilema. Me and my girlfirend recently bought a house. We have a mortgage of 408,500 over 35 years. We have approx 21K in savings and have €600 every month in additional savings. My questions are as follows:

1) We are quite risk averse and are looking to invest the lump into a fixed term deposit account or possibly accross a few. Which ones would be the best at them moment. We would be happy to lock this money away for 5 years in a fixed term account.

2) The €600 we want to put into a regular savings account. Again which one would be the best. We dont need instant access to this money but would like to make withdrawls given appropraite notice.

3) As I mentioned we have a 35 year mortgage paying approx €1,900 p.m but I would like to try and reduce this term, therefore if we used €200 to go off the mortgage each month instead of into savings, how much of an impact would this have the on the term i.e. does the additional €200 go off the principal each month or would some of it also be used for interest payments. Also assuming in 5 years time we use the majority of our savings to trade up our house am I right in saying the extra €200 off the mortgage is as good as puting it into savings as we would have more equity in our house.

Any advice would be greatly appreciated.

Thanks

Rob
 
Hi Rob

Have a look at the Best Buys sections for both the lump sum deposits and best value for regular savings (note maximum contribs on the regular savings; I think AIB only allow 300 pm on their highest interest account)

If your mortgage rate is higher than the highest deposit rate you can get for your extra 200pm, then putting it into the mortgage can make sense. Your mortgage provider can let you know the effect of the extra payment. Generally, extra payments go towards both interest and principal, although if you are already covering your interest, effectively the 200pm will go towards principal. If you intend to trade up in the medium term and you can get a better interest rate for your 200pm than your mortgage interest (which looks to be the case considering the regular savings products available), it may make more sense just to save that money in a savings account.

One other option, depending on your LTV is, if the extra money you have or the savings you can put towards your mortgage will bring you down to a 60% LTV, it may be worth switching to a lower mortgage rate. What rate are you currently paying?

Sprite
 
we are currently paying a rate of 4.6% it is a tracker so that will likely go up pretty soon but unfortunately our savings wouldnt bring us close to a 60% LTV.
 
4.6% is very good. If it doesn't make sense or isn't possible to bring the LTV down to take advantage of a lower interest rate, then I'd recommend the other options in my post.

Good luck with it
Sprite
 
Robbie_C said:
1) We are quite risk averse and are looking to invest the lump into a fixed term deposit account or possibly accross a few. Which ones would be the best at them moment.
Click to expand...
The same question seems to be asked at least once a day at the moment. See the Financial Best Buys forum lists and www.itsyourmoney.ie for details of the various high rate demand and term lump sum and regular saver accounts on offer right now. And the many, many existing threads on how to mix and match multiples of these accounts to maximise interest returns.
 
You must log in or register to reply here.
Back
Top