eyesgreen_1
Registered User
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Hi everyone, interested in your input to see if this idea makes sense.
I’m on a low income (Unable to apply for mortgage) and want to create more cash flow, reduce debt and become mortgage free as quickly as possible.
Current home:
Bank of Ireland mortgage Balance: €52,950
Term: 11.7 years remaining
Interest rate: 2.9%
Monthly Repayment: €449.35
House valuation: €147,500
Financial Plan
Sell Current house and move to cheaper property.
Leftover Amount after House sale and legal fee: €88,500
New house price (Including stamp duty): €119,180
Apply for credit union loan for shortfall for cheaper house €30,680
Interest rate: 7.5%
Monthly repayment: €356
Term: 10 years
I intend to pay another €5000 lump sum off this amount when I receive it from a recent Work contract. This will reduce my monthly payment to €296
With this scenario the Credit union loan with interest would sit at around €25,000 (€35,600 with interest). My intention would be to pay it down as quickly as possible so as to avoid paying 7.5% interest rate as much as possible.
The advantage of credit union loan is I can pay off as much as I want and this can keep reducing monthly repayment over time so creating more cash flow.
So overall with this proposal I would estimate to:
(A) Reduce my overall debt from €52,950 to around €35,000 or less
(B) Reduce my monthly payments to €296 or less
(C) Reduce my loan term from 11.7 years to 10 years or less
I know I’m moving from a loan at 2.9% to a loan of 7.5%, but it would still seem to reduce my overall debt situation.
Does this make decent enough financial sense or am I missing anything here?
Kind thanks
I’m on a low income (Unable to apply for mortgage) and want to create more cash flow, reduce debt and become mortgage free as quickly as possible.
Current home:
Bank of Ireland mortgage Balance: €52,950
Term: 11.7 years remaining
Interest rate: 2.9%
Monthly Repayment: €449.35
House valuation: €147,500
Financial Plan
Sell Current house and move to cheaper property.
Leftover Amount after House sale and legal fee: €88,500
New house price (Including stamp duty): €119,180
Apply for credit union loan for shortfall for cheaper house €30,680
Interest rate: 7.5%
Monthly repayment: €356
Term: 10 years
I intend to pay another €5000 lump sum off this amount when I receive it from a recent Work contract. This will reduce my monthly payment to €296
With this scenario the Credit union loan with interest would sit at around €25,000 (€35,600 with interest). My intention would be to pay it down as quickly as possible so as to avoid paying 7.5% interest rate as much as possible.
The advantage of credit union loan is I can pay off as much as I want and this can keep reducing monthly repayment over time so creating more cash flow.
So overall with this proposal I would estimate to:
(A) Reduce my overall debt from €52,950 to around €35,000 or less
(B) Reduce my monthly payments to €296 or less
(C) Reduce my loan term from 11.7 years to 10 years or less
I know I’m moving from a loan at 2.9% to a loan of 7.5%, but it would still seem to reduce my overall debt situation.
Does this make decent enough financial sense or am I missing anything here?
Kind thanks