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Saving yourself some mortgage interest??

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  • 08-04-2010 3:11pm
    #1
    flanzer
    Registered Users Posts: 3,135 ✭✭✭


    Someone told the missus in work that instead of paying the mortgage on a monthly basis, they switched to paying it on a fortnightly basis and are saving themselves €120 a month on interest.

    Can anyone advise if this is true or can it be done?

    Thanks


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    #2
    Ste.phen
    Registered Users Posts: 2,808 ✭✭✭Ste.phen


    You'll save a small amount (assuming it's variable rate, anyway), but I can't imagine it'd be a large amount of interest like that. Maybe it's 120 a year they're saving in interest?

    Paying half of a month's payment every 14 days means you pay 1 monthly amount extra ovber the course of the year
    i.e there's 26 payment dates where you pay half the 'monthly' amount in a year, versus 12 monthly payments if you pay monthly


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    #3
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    On a mortgage of 200k @ a rate of (lets say) 3%, you would save the grand sum of 318 eur over the life of the mortgage assuming rates stayed the same. Hardly worth it in all honestly. The only way to really save on interest is to increase your repayments.


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    #4
    seamus
    Registered Users Posts: 68,317 ✭✭✭✭seamus


    stepbar wrote: »
    On a mortgage of 200k @ a rate of (lets say) 3%, you would save the grand sum of 318 eur over the life of the mortgage assuming rates stayed the same. Hardly worth it in all honestly. The only way to really save on interest is to increase your repayments.
    Not sure where you got that from.

    You'll save €10k over the life of the mortgage, assuming a 25 year mortgage.

    Twice a year, you'll have to pay 1.5 months' mortgage instead of 1 month, basically. If you can afford that, fornightly is the way to go.


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    #5
    Deise Hurler
    Closed Accounts Posts: 219 ✭✭Deise Hurler


    I have a 35 year mortgage for which im paying back €550 per month. With the interest rates having falling i am currently saving in the region of €300 to €400 per month. I eventually hope to pay off the mortgage through my savings in one lump sum. Can anyone tell me is there a penalty for paying off your mortgage early or would i be better advised paying in more money each month towards my mortgage or paying fortnightly as suggested above.


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    #6
    seamus
    Registered Users Posts: 68,317 ✭✭✭✭seamus


    Unless you're on a fixed rate, there is no penalty for paying off your mortgage early, and if you can, by feck should you do it and be the envy of everyone :D

    Note that if you are saving with the intention of paying off your mortgage, most lenders will let you just overpay your mortgage. This will reduce the interest, meaning that you pay it off even quicker.

    If you keep the money in a savings account, you will probably end up paying more interest on your mortgage than you are earning on your savings.


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    #7
    flanzer
    Registered Users Posts: 3,135 ✭✭✭flanzer


    Thanks. I actually realised after about 30 minutes of posting the original, that I would be paying an extra 1 month by going fortnightly and save shag all on interest accrual. I think I'll leave it so


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    #8
    unclebill98
    Registered Users Posts: 3,816 ✭✭✭unclebill98


    seamus wrote: »
    Unless you're on a fixed rate, there is no penalty for paying off your mortgage early, and if you can, by feck should you do it and be the envy of everyone :D

    Note that if you are saving with the intention of paying off your mortgage, most lenders will let you just overpay your mortgage. This will reduce the interest, meaning that you pay it off even quicker.

    If you keep the money in a savings account, you will probably end up paying more interest on your mortgage than you are earning on your savings.

    Some banks have brought in admin fees when you clear your mortgage. 200euro in some cases. Cheeky, is what i thought.


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    #9
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    seamus wrote: »
    Not sure where you got that from.

    You'll save €10k over the life of the mortgage, assuming a 25 year mortgage.

    Twice a year, you'll have to pay 1.5 months' mortgage instead of 1 month, basically. If you can afford that, fornightly is the way to go.

    A program in work Seamus that's where, which I may add is 100% accurate. I'm assuming a 20 year mortgage not 25. Of course you would save more money the longer the mortgage period. I doubt it's 10k as you have mentioned. In fact I'll check it later just to prove you're wrong.


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    #10
    seamus
    Registered Users Posts: 68,317 ✭✭✭✭seamus


    stepbar wrote: »
    A program in work Seamus that's where, which I may add is 100% accurate. I'm assuming a 20 year mortgage not 25. Of course you would save more money the longer the mortgage period. I doubt it's 10k as you have mentioned. In fact I'll check it later just to prove you're wrong.
    €7k according to Karl's mortgage calculator, which has never been wrong for me.

    The saving is €350/year, perhaps that's what you meant?


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