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Paying savings or mortgage?

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  • 29-11-2012 4:00pm
    #1
    intothewest
    Registered Users Posts: 102 ✭✭


    Looking for advice..we are for the first time in year, both going to be in regular paying jobs (OH just got a perm job). If we’ve learned anything from the last few years of scrimping and saving, it’s that we need to be clever about what we do take home, and save as much as we can. By Feb next year, we will be in a position to save 1000p.m. From looking at another thread on savings ac’s, I am still unsure if we should go with a regular savers account or an instant access one? We would also have a lump sum of 3k to put in to this. If we want access to it, it would be once a year (if even).

    We also have two kids, and we would like to start saving for them. Is it best to keep all savings in one account (and then give them their allocation when they are of age)? Or is opening an account for them separately a better idea?

    Lastly, if we get bonuses from work (I do and he might), are we best off financially, putting them into our mortgage? Our current rate with them is 3.9% and with AIB so probably risingL. Or should these also be put into the savings? My thoughts are to reduce the premium of our mortgage as quick as we could to reduce the amount of interest we are paying as much as we can.


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    #2
    homer911
    Registered Users Posts: 5,119 ✭✭✭homer911


    intothewest wrote: »
    Looking for advice..we are for the first time in year, both going to be in regular paying jobs (OH just got a perm job). If we’ve learned anything from the last few years of scrimping and saving, it’s that we need to be clever about what we do take home, and save as much as we can. By Feb next year, we will be in a position to save 1000p.m. From looking at another thread on savings ac’s, I am still unsure if we should go with a regular savers account or an instant access one? We would also have a lump sum of 3k to put in to this. If we want access to it, it would be once a year (if even).

    We also have two kids, and we would like to start saving for them. Is it best to keep all savings in one account (and then give them their allocation when they are of age)? Or is opening an account for them separately a better idea?

    Lastly, if we get bonuses from work (I do and he might), are we best off financially, putting them into our mortgage? Our current rate with them is 3.9% and with AIB so probably risingL. Or should these also be put into the savings? My thoughts are to reduce the premium of our mortgage as quick as we could to reduce the amount of interest we are paying as much as we can.

    Congratulations on your joint employment!

    As you are not on a tracker, then yes, pay off the mortgage, but keep funds for the proverbial rainy day

    If saving for the children, you should look into Savings Bonds and Certificates which are dirt exempt: http://www.statesavings.ie/Pages/default.aspx

    There are some good regular savings accounts out there (UlsterBank?) - grab them while you can, even if it means transferring lump sum savings into it on a regular basis


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    #3
    intothewest
    Registered Users Posts: 102 ✭✭intothewest


    Thanks homer911, we are over the moon...it's been nearly four years in the waiting! Thanks for the info..I'll have a look at the state savings options now. I start off with the best intentions when it comes to learning about financial things, but then once I start delving into the various options and trying to compare things, I get muddled and lose heart!


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    #4
    AlmightyCushion
    Moderators, Education Moderators, Technology & Internet Moderators Posts: 35,078 Mod ✭✭✭✭AlmightyCushion


    Set up separate accounts for the kids as the account will be DIRT exempt until they turn 18.


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    #5
    digzy
    Registered Users Posts: 3,049 ✭✭✭digzy


    AlmightyCushion wrote: »
    Set up separate accounts for the kids as the account will be DIRT exempt until they turn 18.

    fair play to you. never knew that!


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    #6
    phormium
    Registered Users Posts: 3,339 ✭✭✭phormium


    Don't think that is correct, there is no DIRT exemption for children that I know of, unless maybe there are some accounts in the post office not subject to DIRT.


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    #7
    digzy
    Registered Users Posts: 3,049 ✭✭✭digzy


    intothewest wrote: »
    Looking for advice..we are for the first time in year, both going to be in regular paying jobs (OH just got a perm job). If we’ve learned anything from the last few years of scrimping and saving, it’s that we need to be clever about what we do take home, and save as much as we can. By Feb next year, we will be in a position to save 1000p.m. From looking at another thread on savings ac’s, I am still unsure if we should go with a regular savers account or an instant access one? We would also have a lump sum of 3k to put in to this. If we want access to it, it would be once a year (if even).

    We also have two kids, and we would like to start saving for them. Is it best to keep all savings in one account (and then give them their allocation when they are of age)? Or is opening an account for them separately a better idea?

    Lastly, if we get bonuses from work (I do and he might), are we best off financially, putting them into our mortgage? Our current rate with them is 3.9% and with AIB so probably risingL. Or should these also be put into the savings? My thoughts are to reduce the premium of our mortgage as quick as we could to reduce the amount of interest we are paying as much as we can.


    I think ye need to sit down and do the sums on which one is better for ye over the long term. personally I've put loads of my savings against my negative equity:(mortgage over the years-need to consider interest rates DIRT etc. However, this may not be for you. Who knows what disaster may be ahead!

    I get the idea from your post that the work situation may not be very stable for ye? In that case I'd lob a fair chunk into an easy access account. I've funds with KBC and AIB. Both are instant access. You'll get a better rate if you fix but i dont think it's worth it if you cant access your funds in case of an emergency.

    Another plus with the an post savings is no DIRT-i think? Looks like It'll be going up from wednesday:mad:


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    #8
    r3nu4l
    Registered Users Posts: 17,399 ✭✭✭✭r3nu4l


    homer911 wrote: »
    Congratulations on your joint employment!

    As you are not on a tracker, then yes, pay off the mortgage, but keep funds for the proverbial rainy day

    I can't emphasise this one enough. Before you do anything else, make sure that you have at least six months worth of your expenses saved, more if you can manage.

    Then think about the rest of the money. Check your mortgage deal carefully. Some mortgages place a cap on how much you can overpay and penalise you for paying more (well they do here in England anyway). Others let you overpay as much as you want as often as you want.


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    #9
    AlmightyCushion
    Moderators, Education Moderators, Technology & Internet Moderators Posts: 35,078 Mod ✭✭✭✭AlmightyCushion


    phormium wrote: »
    Don't think that is correct, there is no DIRT exemption for children that I know of, unless maybe there are some accounts in the post office not subject to DIRT.

    Just looked it up there and it appears you are correct. I think they were exempt when I was a kid, it must have changed since then.
    digzy wrote: »
    fair play to you. never knew that!

    It looks like I'm wrong. If so, there is no real advantage to having separate accounts for the kids, just put it all in the account with the best interest rate.


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    #10
    NIMAN
    Registered Users Posts: 33,590 ✭✭✭✭NIMAN


    Good to read a good news story around here, always too much doom and gloom. Well done to you both.

    Agree about getting some buffer built up for emergency and to fall back on.

    Then, the basic rule is that if you can get a savings interest rate higher than your mortgage rate then its better to save than pay down your mortgage. At the minute I think you will struggle to get a savings rate thats better, so paying down the mortgage looks like the option.

    State Savings so some DIRT free accounts.

    Here's a regularly updated link to the best savings options:
    http://www.askaboutmoney.com/showthread.php?t=90481


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    #11
    intothewest
    Registered Users Posts: 102 ✭✭intothewest


    Digzy, come Jan, we will both be working with multi-nationals, so as jobs go, they are as stable as can be until some head honcho pushing paper decides to close ranks!! We’ve learned a lot over last few years, and how we can be wiser with our money and less frivolous, so we want to make the proverbial hay while the sun is shining!

    I was doing some maths on it yesterday, and rather than putting the entire 1000 into savings each month, was going to put an extra 500 towards mortgage and 500 towards savings. We would both be getting bonuses during the year, so are thinking they could be used for holidays or house improvements. My preference would be to reduce the term of the mortgage..I did it on that calculator yest and we could manage it if we reduced it to 15yrs, but I’ve to look at the terms of the mortgage to see if they’ll allow that. If not, I’ve to make sure any extra payments we make go towards the capital amount only, not the interest correct?

    A lot of savings accounts allow you to access the money once without being penalised, but I have to do some proper homework on ones with easy access, cos if they are offering near the same rates then that’d make more sense. I think I will also get some savings or prize bonds in the kids names, just on the off chance they might win something!!


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