Paying Mortgage in advance

R

rockofages

Registered User
Messages
191
Hi All,

Myself and my wife want to pay two years of our mortgage up front, and have no payments to make until July 2010.

My question is: the interest relief we currently get, will we continue to get this every month for the next 2 years?

TIA.
 
At first glance, I'd say the simplest way of achieving this is to dump two years' repayments into a high-interest account and drip-feed the mortgage repayment monthly over the next two years. As long as the house is your home, you'll continue to be eligible for TRS.

The alternative would be to pay the lot off your mortgage now and request that the lender freezes repayments for two years. I'm not sure that the lender will do this and I suspect that you might lose TRS, at least in the second year.
 
Thanks for that. The lender (AIB) has no problem in taking the money up front and freezing payments. Currently it's worth €1200 in TRS, which I'd prefer not to lose.

OTOH, if we were to pay a lump into it next year, how much would we have to pay minimum to get the €1200 back?

Mortgage is 25 yr, house bought in Aug 2000. Repayments currently 870 a month, tacker, ECB+0.6%

TIA.
 
On mature reflection, TRS is calculated on the interest you're paying, not the repayments. So in theory as you're still being charged interest, you probably still qualify for TRS.

But I'm not a tax professional. Probably best to contact Revenue TRS section 1890 46 36 26 to verify (and get a reply in writing) before doing anything.
 
2 years of payments are 20,880. Put that in an account earning 5% and drip feed it to the mortgage, and you'd get 2 mortgage payments free (possibly 3).

Suss out how much your repayments will be when the freeze is over if you put it off the mortgage. Remember that while you reduced the capital amount, the interest will be compounding on it.

Also, don't forget to factor in some extra money for potential interest rate increases.

For your specific question, TRS is on interest, so you would still get it as long as you are living there.
 
j26 said:
2 years of payments are 20,880. Put that in an account earning 5% and drip feed it to the mortgage, and you'd get 2 mortgage payments free (possibly 3).
Click to expand...

Not sure about those figures - 5% after DIRT in year one is 835 (less than 1 870 payment) if you ignore the drip feeding reducing the capital amount, so it will be less, and it will be significantly less in year 2 as more than half the amount will have been paid out - might get 1.5 payments out of it, but not 2 and certainly not 3. (Sorry, too lazy to do the calculation)
 
rockofages said:
Hi All,

Myself and my wife want to pay two years of our mortgage up front, and have no payments to make until July 2010.
Click to expand...


Do you mind me asking if there is a particular reason for doing this? Is it that you will not have the income available for a duration or just obtained a lumpsum & fancy not having a mortgage to pay?

If you can afford to pay the lumpsum and continue to make the payment, you will save alot of money - I look at lumpsum payments as if you are paying the last year (rather than next year)...so in reality you are saving the interest you'd pay for the next 20 years (if that makes sense!?!?)
 
I assumed they planned to take Leaves Of Absence, or a world trip or something?
 
I think it might be best to do as Liam advised for psychological reasons. I think it would be awful to have to return to making mortgage payments after a two years break
 
I would guess something similar, but you never know....people sometimes do strange things for strange reasons!! You've been on AAM long enough to know that...
 
Thanks for all the replies. The Revenue have confirmed the TRS is still payable.

My wife took redundancy and we are in the process of trying to get a business off the ground and would prefer just not to have to worry about paying a mortgage. Not the financially best thing to do, but again then it's not as bad as buying a car!
 
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