Pay down mortgage entirely, but what about my rainy day fund?

17-pdr said:
I’m currently paying €32pm for this.
Click to expand...

In case it's not clear...

The sum assured by your mortgage protection policy is completely independent from the actual balance on your mortgage.

So let's say the sum assured is €100,000 today but you clear your mortgage completely. If you die today, your estate will get €100,000.

So check what the sum assured is and decide if it's worth paying €360 a year for it.

If not, scrap the policy. I doubt that the lender will do anything about it other than to write to you saying you are a bold boy.

Brendan
 
Last edited:
Laughahalla said:
If you cancel the premium and stop paying the bank can take out a policy and charge you for it so I would not stop paying until you spoke with them.
Click to expand...
In case of any confusion, I was not suggesting that they do anything - in particular cancelling the existing cover - until they spoke to the lender first.
 
Brendan Burgess said:
So let's say the sum assured is €100,000 but you clear your mortgage completely. If you die, your estate will get €100,000.
Click to expand...
That's the case with level term cover.
I thought that most mortgage protection policies were decreasing term? Such a policy would pay out in or around the capital balance expected to be due at any point in the loan term based on the original repayment schedule.

Level term vs. Decreasing term Life Insurance | Direct Line

Learn about Level Term vs Decreasing Term life insurance, to help you decide which would be the policy for your situation. Learn more today.
www.directline.com
 
Last edited:
Thanks Brendan.

The current sum assured is €112,000. It's been that amount for quite a while now. I originally borrowed €162,000 back in 2008. My mortgage is with Bank of Ireland, and the protection policy is with Bank of Ireland Life. I have no next of kin.

I'll ring up the bank and discuss on Monday. I've already shopped around for cover from other companies and was quoted €15pm from one.
 
17-pdr said:
I have no next of kin.
Click to expand...
If you have no spouse or children then just get rid of it. It doesn't matter that your savings are greater than the remaining balance.

The mortgage protection policy only pays out on your death. Your estate will have cash and a property to be sold so the bank would be paid either way. You don't need the mortgage protection anymore.

17-pdr said:
Amount remaining is now €11,875. Repayments going forward will be €95pm.

Savings now are €25,000.
Click to expand...
Keep it simple, just clear it all now
 
Ok. I'll consider it strongly.

Thank you all for the further replies.
 
Couple of things that jump out at me

Why didn't you clear your mortgage in full??
You have the means to do this so why wait, I can understand the need for a cash reserve I have one and it's very much bigger than yours but the difference between you and me is I'm not in a secure employment and am relying on savings and investments to fund my life so I like the comfort of the cash fund should anything go wrong with the other side of my finances
You on the other hand have a secure income so you don't need a huge rainy day fund per se. If you cleared your mortgage now and rediverted you mortgage and insurance payments you'd be saving nearly €4.5k a year, which will grow nicely over the next ten years you intend to work

I notice after paying the lump sum you've reduced your repayments to €95pm but over thirteen years this will cost you nearly €3k in interest at current rates, yes it's a small amount of money when divided over thirteen years but why pay it if you don't have to
Given that your talking about retiring in ten years is that €3k not better off in your nest egg than the banks pocket and if you can avail of any tax credits to further fund your pension well than it's even worth more than the €3k you'll save in interest

Regarding the mortgage protection policy I would agree with Brendan here
Brendan Burgess said:
If not, scrap the policy. I doubt that the lender will do anything about it other than to write to you saying you are a bold boy.
Click to expand...
I did it with mine in 2012 and for the next five years or so I used to receive a letter every year informing me that there was no protection policy attached to the mortgage but that is all that happened, I did clear the mortgage in late 2017, so I would presume the same would happen to you especially given that the mortgage is very small but if it becomes an issue you have the funds...
 
Update.

Thought about it over the weekend, and cleared it in total today.
Remaining savings are now €13,000.

Now officially debt free. Happy days!

Thanks for all your responses.
 
Was chatting to the bank (Bank of Ireland) this morning re what happens next, and they said they would store the house deeds for as long as desired with no charge for doing this. Nice to know that they do that.
 
Any chance you could get that in writing from BOI because no doubt in ten or twenty years time when they can't find the deeds the story will have changed re storing the deeds FOC

I have a similar arrangement with BOI but under different circumstances, although I cleared both my mortgages there was an outstanding charge on the account of €90 which BOI insisted that I pay. I refused to pay and was informed that until I pay they will hold onto my deeds
Probably not the best scenario to be in but as I don't ever envisage myself selling the house I'm not too concerned and will be somebody else's problem when I'm gone much like the ground rent that I refuse to pay an extortionate fee to buy out

And congratulations on owning your home out right and been debt free, it's a very liberating feeling
 
You must log in or register to reply here.
Menu
Log in
Register