Shortening my mortgage term

Hi All...
Im new to this site, so bare with me..
My wife and i are hoping to be mortgage free by the time we turn 45,im 27 and she is 26 and we have one little baby,we have a tracker mortgage {ecb+1.2} very lucky to get it as we were one of the last!! amount outstanding is aprox 186000 house is worth about 260000 we are 3yrs in.We both are blessed to be in full time employment, my wifes job is secure my job only so so.....we have very modest incomes,and live very modest lifestyles we holiday once a year and try and get some weekends away as we dont go out drinkin the weekends..our mortgage is about 750 per month 35yr term.. after tax we have a combined take home pay of 4000..we have all the usuall house hold bills health insurance, food,broadband,sky,bins,esb,oil etc etc!!!! we also run two cars..we get around 70 euro mortage interest relieve and our 140 children allowance per month, at the moment we are saving around 1400 per month and we have savings of about 10000.my question to all of ye is what can we do to reach our goal of being debt free by the time we are 45yrs young.... ps.. I am aware that life has a way of throwing you curve balls, but i supp we cant predict the unpredictable..

Thanks in advance for any help

Given the fact that you have a tracker mortgage, you'd be better (financially) just to continue saving the extra cash than paying off the mortgage. You'll get a better return. Then should the ecb rate ever go up above deposit rates, you can then transfer it onto the mortgage if you like.

Ryaner's right - you can get a better rate of interest at the moment on deposit (even after DIRT tax) than you'd get by paying down your mortgage. See the Best Buys section. That situation is unlikely to last forever as I believe deposit rates will fall over the next while.

You might find the this calculator useful in your thinking as it allows you to work out the effect on your mortgage of making overpayments.

Thanks to both of ye for yer replies its much appreciated...

Just to offer a different perspective ..... the above responses are correct if nothing changes drastically. If you have any concerns over the safety of Euro deposits then you may consider it more benefical to maintain modest savings and pay off your mortgage. Either way, as a young couple with a baby you should probably be looking to have a larger safety net for a rainy day before paying down your mortgage becomes a concern.

Would second ryaner. Well done by the way with such a good tracker and no negative equity and such a healthy attitude!!

When making your calculations don't forget to include the future cost of childcare.

When both of you are fulltime in work, creche fees are between 800-1000pm.

And should you be blessed with a second child - having 2 children in childcare will be a very hefty burden.

I'd continue to save so you might have some options in the future

Personally I wouldnt be considering becoming debt free with only €10,000 in savings (or does it read 100,000?). You must only have been saving a few months if your figures are correct. As others have said I would see how ECB rates go over the next few years but if I were you I would concentrate on upping your savings and getting a good return on them. While I do understand people wanting to clear their mortgage I think once you have a decent rate I wouldnt be too concerned with it.

You could ask if you can index your repayments. I requested this a number of years ago, in that I have my repayments indexed by 1% per year. In your case this would amount to €7.50 extra a month in the first year, (750+7.5)*1% in the second year and so on

I had 32 years to go on a 35 year mortgage at the time and the revised term, should I keep this up year on year was reduced by 6 years.

I'm unsure how this reduction might be affected by changing interest rates, but I receive a revised term annually, based on that years +1%

Bee said:

You could ask if you can index your repayments. I requested this a number of years ago, in that I have my repayments indexed by 1% per year. In your case this would amount to €7.50 extra a month in the first year, (750+7.5)*1% in the second year and so on

I had 32 years to go on a 35 year mortgage at the time and the revised term, should I keep this up year on year was reduced by 6 years.

I'm unsure how this reduction might be affected by changing interest rates, but I receive a revised term annually, based on that years +1%

Click to expand...

+1 Great idea.

I think your mortgage term is too long, but you have an excellent tracker rate so there is no advantage to paying it down, plus your wife has a permanent job. Also you've not in negative equity. A good idea would be to overpay say from the 750 to 1K a month and that way you'll pay it off earlier. It's good to continue saving, you'll need it for future expenses, next child, creche, school expenses, car etc And for life's unexpected problems.

Think about retirement income and how you are going to fund that.

You're both on the right track. Well done.

Firstly i want to thank everyone on the brillant feedback ive been getting,ive been doing alot of research on various funds and savings accounts and i think im going to go with the state savings 10yr national solidarity bond and the 4yr national solidarity bond,if my calculations are right..I have calculated that if i put 800 per month into the ten year one i should get a 47.3 percent return provided dirt tax doesnt go up giving me a return of 45400 on top of my 800x12x10=96000+45400=141400..giving me enough to pay down my mortgage should i choose to do so or maybe even make them an offer for a little bit less if they are really tryin to get people off trackers..I have also decided that i should put 400 per month into the 4 yr one which should make me a 13.9 percent return which is 2668 on top of 400x12x4=19200+2668=21868,which should start my fund for school college etc etc..would be delighted if i can get someone to second my plan and verify that my calculations are right,i would also like to add that i would still be saving 300 euro per month in a instant access account for anything i havnt budgeted for,which there always seems to be.....

At the risk of repeating myself, don't presume that money put on deposit will be there when you go looking for it, especially over terms like 10 years. The recent election results has thrown more uncertainty into the Euro zone. By all means use deposit accounts but be aware that there are risks.

LONELY-EURO said:

Firstly i want to thank everyone on the brillant feedback ive been getting,ive been doing alot of research on various funds and savings accounts and i think im going to go with the state savings 10yr national solidarity bond and the 4yr national solidarity bond,if my calculations are right..I have calculated that if i put 800 per month into the ten year one i should get a 47.3 percent return provided dirt tax doesnt go up giving me a return of 45400 on top of my 800x12x10=96000+45400=141400..giving me enough to pay down my mortgage should i choose to do so or maybe even make them an offer for a little bit less if they are really tryin to get people off trackers..I have also decided that i should put 400 per month into the 4 yr one which should make me a 13.9 percent return which is 2668 on top of 400x12x4=19200+2668=21868,which should start my fund for school college etc etc..would be delighted if i can get someone to second my plan and verify that my calculations are right,i would also like to add that i would still be saving 300 euro per month in a instant access account for anything i havnt budgeted for,which there always seems to be.....

Click to expand...

I think your calculations are a bit off.
You will get 50% return in what you put into the bond after 10 years.
After 10 years you will only have had €800 in there for 10 years.
The next €800 will only have been there for 9 years 11 months.
The last €800 will only have been there for a month.

"www . nolanassociates.com/Tools/Calculators/Savings_Calculator"
There are loads of calculators available online. Thats just the first one i found on google that wasnt a bank.


What we did was put our all of our spare cash into the highest interest accounts we could get. Spread over a few accounts both in Ireland and abroad.
When trackers came out we got our mortgage onto a tracker of 0.5% above ECB.
At the moment we now have more than enough to clear the mortgage, but by leaving the money earning more interest (less dirt) than we are paying on the mortgage, we are actually now making money by not paying off the mortgage.
Recently I was into the bank to point this out to them and was offered a 20% write down to pay off the mortgage in full (after I showed them the numbers in BOLD ). It still isnt enough to convince me to pay off the mortgage. I'm better off with the money on deposit than paying the mortgage off, even with 20% taken off the top.

Recently I was into the bank to point this out to them and was offered a 20% write down to pay off the mortgage in full (after I showed them the numbers in BOLD ). It still isnt enough to convince me to pay off the mortgage. I'm better off with the money on deposit than paying the mortgage off, even with 20% taken off the top.

Click to expand...

Can you please explain this? How could you be earning more on deposit even with the bank offering you a 20% write down on your mortgage?

GoldDigga said:

Can you please explain this? How could you be earning more on deposit even with the bank offering you a 20% write down on your mortgage?

Click to expand...

I'm not going to give you my figures, but if you take an investment property on a very low interest rate. Nice rates on savings and tax relief. Play with the numbers and will get to the same conclusion.

Very simple very rough figures. I havent got time to work them out properly. And I cant type properly here from my phone.
€100,000 owed over 30 years at 1.5%
75% tax relief on interest.
total interest paid in 30 years 25% of €25,000 = 6250


€100,000 in deposit account for 30 years at about 4% or more int.
i'll let you surprise yourself by working this out for yourself.
solve for dirt and get the difference between them.

So if the bank gave you 20% on day one and you saved that at 4% for 30 years it changes the calculation, but not enough.

now all the variables will change over the years, but you just pay it off whenever it doesnt suit you anymore.


Put you own figures in. eg you might not have an investment property or you might pay a different rate or different term etc

Heaps of variables, but the situation works out for anyone with a tracker and extra money.

Better still. Lodge that money into your pension over the years and see what happens.

Or what about solidarity bonds etc.

If it works out for you, do not pay extra money off your mortgage. Put it on deposit. You make a profit and have the money on hand should you need it. if you dont need it and arent getting max tax relief on your pension contribution, then you can make more that way. But nothing better than having the cash at hand.

Make your money work for you not the bank.

Hey Alex Martin, not long after I posted that reply I realised the error of my ways, but it could still work in my favour.. If I put 800 per month into the bonds for ten years, after the ten years is up I should be getting back 800 plus 47% interest which is roughly 380 =1180 every month for another ten years, which should cover my mortgage to maturity..what would you think of that ..???

LONELY-EURO said:

Hey Alex Martin, not long after I posted that reply I realised the error of my ways, but it could still work in my favour.. If I put 800 per month into the bonds for ten years, after the ten years is up I should be getting back 800 plus 47% interest which is roughly 380 =1180 every month for another ten years, which should cover my mortgage to maturity..what would you think of that ..???

Click to expand...

I would be inclined to steer clear of the solidarity bond. Look at deposit rates and see what you can get.
When you get the APR and do the sums you might find that its a small price to pay not to be locking your money away for 10 years, or risking losing most of the earnings should you need to withdraw earlier than 10 years.

try this to calculate your mortgage interest. Put www in front of it
drcalculator.com/mortgage/ie/


Because your mortgage wil ahve changed from when you got it - different rates, overpayments etc you need to tweak it a bit.

Put the interest rate and principal remaining in. Then slide the "years" bar until the "payment" value roughly matches your current monthly payment amount. This then gives you figures for your mortgage from now until the end of it.
You can play around with overpayments etc then.

And there are loads of savings calculator if you google.
Dont forget to subtract DIRT and you should be able to work out your options.