Payoff Mortgage With Savings

Y

yop

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Apologise if this is the wrong forum!

I am looking to switch my mortgage, 76k left on 3.15% with 7 years left. Looking at 2.3% with Ulster and paying it back over 6 years.
When I look at what I have across savings, investments, credit union account and vested share options I would have 32k.

I'm always wary of the rainy day fund but I am wondering if people think I should lump that money against the mortgage or deposit it.
I think there are min levels on mortgages also?

Apologise again if incorrect forum, I wasn't sure if it was a savings or a mortgage question
 
I'd like to hear an answer on this too if there is someone who can offer an opinion ? Am in a very similar situation and asking myself these same questions!
 
It would make most sense to use a calculator such as this one to compare the possibilities.

Karl's Mortgage Calculator

Mortgage calculator with graphs, amortization tables, overpayments and PMI
www.drcalculator.com www.drcalculator.com

In a nutshell, if you use your €32k you should pay considerably less interest and almost half the remaining term (all other things being equal - i.e. you maintain your repayment at the current level).

There is generally a cost to moving so it is worth confirming that the lower rate will pay for the cost.
 
It depends on your day to day income and what you expect to have to pay for in the next 7 years.
Once it's in the mortgage it is 'gone' as such. If any big expense like a new car would need cash you'd have to borrow at a higher rate than the mortgage. Consider buying health insurance before you are 35 as it costs much more after that.
If you are single, with no kids, and have a steady income then you have the flexibility to do that.
There is no point putting it all into the mortgage and then getting a loan for a new car of 7% in 2 years time.
There are also legal costs of switching to be factored in. It could cost 1k in fees to switch which may wipe out any savings on smaller mortgages.
 
You have €32k which in cash would pay next to no interest. The opportunity cost of that is 2.3% a year, as that's the lowest rate you would pay on a mortgage.

So you are losing out on €736 mortgage savings a year for the benefit of having cash to hand if you need it for an emergency, a new car, loss of job, etc.

Tbh I keep about as much myself in an emergency fund. It's not very efficient but my car will sit down one of these days and I don't want to have to pay a lot of interest on a car loan.
 
It's not really "pay off mortgage", it's "pay down some of mortgage", the banks still have their claws in you for E44k even if you put all savings against mortgage :cool:

As above, you need to think if you might need E32k in next few years, perhaps for car replacement, any house renovation etc. You certainly don't want to be borrowing to buy a car after using the savings. I'd probably do 50/50, pay down E15k with of debt and hang onto the rest for emergency fund.
 
Very tempting to pay off a large chunk of mortgage but If it was me I would keep three months worth of expenses (expenses not income) and put the rest against your mortgage.

Obviously, if you have any other consumer debt pay that off first.
 
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