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overpaying mortgage

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  • 03-11-2009 10:08am
    #1
    anyanka
    Registered Users Posts: 19 ✭


    Hi,

    Is it possible on a fixed rate mortgage to make overpayments in order to shorten the term of the loan?
    I know it can be done on a variable rate mortgage.

    thanks


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    #2
    seamus
    Registered Users Posts: 68,317 ✭✭✭✭seamus


    My lender lets me do this, but only very small amounts of overpayment - up to a max of €65/month iirc. That's ICS. You'll need to contact your lender to find out.


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    #3
    Kipperhell
    Closed Accounts Posts: 1,477 ✭✭✭Kipperhell


    Many mortgages allow for an additional payment once a year. You can also just simply reduce your term with out any big fuss. Did it myself and all that was involved was a letter. I think you have to be clear what you are doing or they take the extra payments off the interest rather the the principle.
    I remember reading about somebody over paying for a few years before he realised he wasn't reducing his mortgage but building up credit on interest payments and he was not impressed.


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    #4
    eth0_
    Registered Users Posts: 10,846 ✭✭✭✭eth0_


    Switch to a mortgage that will allow it (if you can), or put the money in a high interest savings account and use it to help pay off the mortgage at a later date.


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    #5
    Fancy That
    Registered Users Posts: 137 ✭✭Fancy That


    eth0_ wrote: »
    Switch to a mortgage that will allow it (if you can), or put the money in a high interest savings account and use it to help pay off the mortgage at a later date.

    Yes great idea if you are on a low rate... only draw back is if rates rise and your money is tied up in some special savers account...long nights in may be on the cards then.

    If you are on a high interest rate as are alot of people on fixed/variable then i would continue to pay my mortgage. Overpaying on a rate of 5% is a good idea because not many savers accounts will give you a return on your money like that.


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