Pay off Mortgage or Deposit

L

legoland

Registered User
Messages
11
Hi,
Ive been reading a lot of posts on whether to pay off the mortgage ( .6% above ECB rate, €220,000 outstanding and 21 years left) or put the lump sum (approx €200k) into a the Post Office State savings?
Most people say if the Tracker rate is below the savings rate then keep the savings but 21 years is still a long way to go.
The question I have do you think the bank (NIB) would be open to negotiation on taking this amount or another amount as a full and final payment considering they will be losing money on my tracker for the next 20 odd years?
Is this in the banks best interest or would they just tell me to sling my hook?
If the mortgage was gone Id last be €200 the better each month from the Life and SIC cover side of things.

Any advice appreciated.
 
Some key posts on this. Suggest having a read.

http://www.askaboutmoney.com/showthread.php?t=153032 - Are lenders giving discounts for the early repayment of tracker mortgages?

http://www.askaboutmoney.com/showthread.php?t=153229 - What is a fair price for paying off a cheap tracker early?

http://www.askaboutmoney.com/showthread.php?t=101819 - Should I use a lump sum to reduce my mortgage?

Short answer is if you *only* have 200k, then no, don't use all of it to reduce the amount outstanding, perhaps some of it. Maths is worked out on that last post and it explains the benefits of either direction.
 
I suppose it very much depends on your mindset. Personally I would rather clear the mortgage and be debt free. Particularly when interest rates for savings are so low, there is not a huge difference between mortgage rates and depsit interest rates and the rate of return on money is so poor at present.

Then by saving what would have been your mortgage payment each month, your savings will accumulate quite quickly. Who knows, in a couple of years interest rates may have risen which would make servicing the mortgage more difficult but would be far more beneficial if you are only dealing with savings.
 
If you decide to pay the mortgage off, or some of it, if you arent on a fixed rate they have to accept any money you want to pay off the capital.
 
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