Pay more into my tracker?

tigershould

hi, looking for some financial advice...

i bought my apartment in 2006 and took a tracker mortgage of 250k

i have since got a better job and have some surplus cash every month

1)

i can afford to double my monthly payments and clear my tracker in 10 years.

is this a good idea - pay off the mortgage whilst interest rates are low ?

or should i keep the tracker as theyre a decent mortgage to have?

2)

i've seen a house that i like for €350k and i think i can afford a mortgage for it.

should i try and sell my current apartment (negative equity) cut my loses and move to a new mortgage

or should i try and rent my apartment and get another mortgage for the new place (i'm pretty confident i could rent the current place and get mortgage approval... maybe:)


all advice appreciated

srsly78

Depending on interest rate etc you might be better off putting the money in a deposit account. Also note some mortgages don't let you pay off early - they might have penalty clauses. The banks don't like you paying off early because they don't make as much.

ResearchWill

It all depends on the rate of your tracker. Say you are currently paying 2% then you may be better off putting any extra cash in a good savings account say paying 4% and just leave the money sit there. If your tracker starts to move past your savings rate then take the cash and throw it against you loan.

In real action to your other options seek good independent money advice.

tigershould

srsly78 wrote: »

Depending on interest rate etc you might be better off putting the money in a deposit account. Also note some mortgages don't let you pay off early - they might have penalty clauses. The banks don't like you paying off early because they don't make as much.

thanks,

my bank (EBS) doesnt have a penalty clause (i think)

i did look at deposit accounts, but if say its €1k per month deposit after DIRT i make less than €100 per year interest (i think) - i'd rather just have no mortgage in 10 years time.

Macailz

tigershould wrote: »

hi, looking for some financial advice...

i bought my apartment in 2006 and took a tracker mortgage of 250k

i have since got a better job and have some surplus cash every month

1)

i can afford to double my monthly payments and clear my tracker in 10 years.

is this a good idea - pay off the mortgage whilst interest rates are low ?

or should i keep the tracker as theyre a decent mortgage to have?

2)

i've seen a house that i like for €350k and i think i can afford a mortgage for it.

should i try and sell my current apartment (negative equity) cut my loses and move to a new mortgage

or should i try and rent my apartment and get another mortgage for the new place (i'm pretty confident i could rent the current place and get mortgage approval... maybe:)


all advice appreciated

This guy is right, seek independent financial advice about something so important.

Although what i would say is if you've got the opportunity to pay of your mortgage early, then why wouldn't you do it?

tigershould

ResearchWill wrote: »

It all depends on the rate of your tracker. Say you are currently paying 2% then you may be better off putting any extra cash in a good savings account say paying 4% and just leave the money sit there. If your tracker starts to move past your savings rate then take the cash and throw it against you loan.

In real action to your other options seek good independent money advice.

ok, my interest rate is less than 2% (+0.8% above ECB i think)

i did find any deposit accounts paying 4 % ! and most limit the amount i can put in after a year - maybe i need to look again.

yeah, i need some good money advice, cheers.

tigershould

Macailz wrote: »

Although what i would say is if you've got the opportunity to pay of your mortgage early, then why wouldn't you do it?

yeh, this is what im thinking

Macailz

tigershould wrote: »

Macailz wrote: »

Although what i would say is if you've got the opportunity to pay of your mortgage early, then why wouldn't you do it?

yeh, this is what im thinking

If you're lucky enough to do it, then id seriously consider it (obv seek advice though)

As for upgrading, i honestly wouldn't consider it at this point. Market prices still falling and will do for at least another couple of years.

D3PO

if your tracker is 0.8% above the ECB rate you would be mad to pay anything off it early right now.

There are plenty of accounts ranging from 7 day access to 12 month fixed paying 3.5% plus

Your far better served to put the money you were thinking of paying off the mortgage into one of these accounts until such time as the intrest on the mortgage becomes higher than that of the case on deposit (mminus dirt)

that is the most efficent thing to do with any excess cash.

Its mad how some people think. I know somebody who paid 5 grand off their mortgage recently whilst running an 8 grand credit card debt.

Completely inefficent use of their hard earned cash.

D3PO

tigershould wrote: »

ok, my interest rate is less than 2% (+0.8% above ECB i think)

i did find any deposit accounts paying 4 % ! and most limit the amount i can put in after a year - maybe i need to look again.

yeah, i need some good money advice, cheers.

most of the account limits beging at 10 grand but many more are much higher 100,000 etc

just look till you find the most suitable one.

tigershould

thanks D3PO, i will have another look at deposit accounts

i'm talking about depositing €1k per month which would be over double my current mortgage repayments.

but my thinking is

1) if interest rates are low and i clear the mortgage i will effectively pay less interest over the life of the mortgage wont i? however, if i pay when interest rates are higher i'm giving the bank more money arent i ? (maybe i have this wrong)

2) i'm in negative equity and if i pay more now i can get back to positive which this is a better situation for me (i think)


re: the house, its been seriously discounted (30%) over the last 12 months and i'm afraid if i dont jump in now someone else might get ahead of me - i really like it.

D3PO

tigershould wrote: »

thanks D3PO, i will have another look at deposit accounts

i'm talking about depositing €1k per month which would be over double my current mortgage repayments.

but my thinking is

1) if interest rates are low and i clear the mortgage i will effectively pay less interest over the life of the mortgage wont i? however, if i pay when interest rates are higher i'm giving the bank more money arent i ? (maybe i have this wrong)

2) i'm in negative equity and if i pay more now i can get back to positive which this is a better situation for me (i think)


re: the house, its been seriously discounted (30%) over the last 12 months and i'm afraid if i dont jump in now someone else might get ahead of me - i really like it.

re point 1.

Yes you will pay less interest on the mortgage BUT 1K extra paid off a month will save you circa €198 a year in interest (actually a little less but not assed figuring out the exact number)

saving the same in say an AIB 7 day access account (Using this account example for the purposes of illustration ) will earn you circa €331 after DIRT. Well again a little less but not assed figuring out the exact number.

So by saving the cash rather than paying it off the mortgage your actually making more efficent use of your money. Now granted its not a fortune but better in your pocket than then banks.

You have the benefit of then being able to pay off a lump sum of the mortgage capital when rates change to favour paying off the mortgage.

Re point 2

Its only better to get out of negitive equity if you have a reason to do it. Unless your planning on moving house being in negitive equity has no impact on you.

srsly78

tigershould wrote: »

thanks,

i did look at deposit accounts, but if say its €1k per month deposit after DIRT i make less than €100 per year interest (i think) - i'd rather just have no mortgage in 10 years time.

You need to look harder at deposit accounts, because you can get a lot more interest than that. There are several institutions offering over 4% interest on instant access deposit accounts.

tigershould

thanks for the responses guys.

plenty of food for thought...