overpaying tracker

D

drrkpd

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Hello,

I am 60 and decided to go abroad late in my career for financial and personal reasons.
I am now in the fortunate position to overpay my mortgage which is fixed at ECB + 0.75% and am currently paying interest only due to finish when I am in my 70s!!!
I owe almost 1,000,000 mortgage house value 450,000.
I note that Brendan has been quoted as saying under no circumstances should tracker be overpaid as you can lose the ability to move tracker to another property.
Can Brendan or anyone advise on the pluses or minuses of overpaying tracker??
it is likely I will be away until at least 65 and possibly longer.
thanks
 
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You are 60 and owe €1,000,000 on a house worth €450,000.

In general the reason that people don't over pay a tracker is that it's the cheapest money you will ever get. Better to save the surplus for changing the car, eduction what ever.

Not really sure that applies at 60. What's your goal here. Are you going to pay back the €1,000,000 over 15 years or just the €550,000 and sell.

If you can achieve a higher return on the surplus elsewhere then financially it make seance to invest it, if you want to live in a debt free house then pay down the loan faster.
 
thanks

Thanks- i want to pay my debts - that is why I went away. Not easy when you are older but at least my family are grown up and I really feel for people who have had to leave small children. It was simple really- bankruptcy in UK or emigrate.
I am trying to repay my mortgage in full -as much as I can anyway. My thought is to keep the family home but realise not much point making too many plans at 60 and may downsize when I hopefully get out of negative equity.

I cannot believe my stupidity and the banks in giving me a mortgage until 70- I hope that reading this others will not make the same mistake.The plan seemed OK based on then salary and proposed pension but all that went out of the window for me same as everyone else.
The only sensible thing I did was just to own one house- my own and I do realise that I am fortunate compared to many others who post here.

My question is more a technical one- if I overpay the tracker or pay a lump sum now will I be in breach of the agreement??
And am I better overpaying each month or in lump sums??
I dont have a copy of the mortgage and clearly I only want to approach the bank when I know the facts hence the question.
All other debts now wiped out thank god.

I suppose if I could find a safe investment that paid more than 0.9% after tax ( my mortgage rate is ECB+ 0.75) could do that but truthfully I want to repay mortgage but not lose the advantages of it.
 
{will I be in breach of the agreement}

Short answer = no.
...............

I would suggest pay what is due each month and retain extra in savings ie always keep a buffer .
 
As per Gerry's post you are certainly not in breach of agreement by overpaying the tracker. Lump sum or monthly, it does'nt matter.
Can I also respcetfully suggest that you may be approaching this loan on a slightly naive belief that you don't have a problem!! With an IO loan facility of 1M on a property valued at 450K, any payment of capital now is likely to be a drop in the ocean in respect of the total debt and I would see it as being unnecessary. Luckily you have 10 more years of IO, but you are likely to have a big problem at the end of the loan period. The Bank are going to demand their 1M and you will have no means of paying them!! You will need some level of funds built up to deal with this issue in 10 years time and unless you can come up with a significant lump sum at that time I can't see how you can hang on to your home. Give the issue some thought before making any loan payments now and get some professional advice.
 
thanks to everyone and especially to Brendan.
Believe me I truly do know that I have a major problem. Like many on the forum I have had the same sleepless nights but I bit the bullet and emigrated at my age and I am lucky to have found a suitable job to go to. Despite working all of my holidays and weekends I simply could not pay my way in Ireland and I had children in college then.
I would like others to realise that signing agreements to repay mortgages until 70 sounds fine in theory but believe me is is tough when you reach 60 and find yourself in the same position as me.
I will take professional advice but would be grateful to know from who??
Who would people recommend??- either post or PM me.

Thanks for clarifying the technicalities and I hope that others don't make the same mistake as me
 
You have a 10 year time gap before this issue needs to be addressed. Who nows what value your house will be at that time!!
I'm assuming that you'll want to return to Ireland in the future. I'm also assuming that you will not have any major pot of monet at that time and income will be restricted to pension (OAP +?).
You will need to sell the house at the end of the mortgage period. I don't see any other option on that decision. However, rental options should be an alternative and should not be regarded as being a disaster!! Many people are now looking at long term rental as being a preference.
With a relatively low income and assets at age 70 there is little the Bank can do at that time to recover a mortgage shortfall (if there is one). Unless you have other assets or a relatively high income, the bank will be forced to write off any shortfall in the mortgage. No point in worrying about this now.
 
By the way I would like to also send the message that being forced to emigrate was one of the best decisions of my life. It has given me a whole new lease of life and I dont want people to always assume that emigraton is is a negative thing.
However I am lucky my children are grown up and can visit me. I cannot imagine how hard it would have been to leave my children when they were younger.
 
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