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Applying for BOI mortgage - 20 or 30 years? Fixed or variable?

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    #32
    Ritchi
    Registered Users Posts: 319 ✭✭Ritchi


    Actually if you use this: http://www.drcalculator.com/mortgage/ie/

    It looks like my theory is right.


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    #33
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Ritchi is 100% correct. A mortgage is not pre-loaded with interest. The interest charged on a mortgage is calculated on a daily basis on the balance outstanding. If over ayments are made i.e. making the equivalent 20 yr repayment on a 35 yr mortgage term, the mortgage balances reduces quicker and the interest is being charged on a lessor amount o/s than if the 35 yr term was being adhered to. If the 35 yr mortgage is repaid in 20 yrs, the interest charged will be the exact same as if the mortgage term itself was taken out over 20 yrs to begin with.


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    #34
    Cathmandooo
    Registered Users Posts: 17,324 ✭✭✭✭Cathmandooo


    That's very interesting. What would be the point in taking out a 20 year mortgage if the 35 year one gives you a little more leeway? As in if you think at the moment that you'd be well able to make the repayments for a 20 year mortgage would you not be better off going for the 35 year, paying the 20 year repayment and leaving yourself a buffer if something happens in the future leaving you less able to meet the 20 year repayments?


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    #35
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    Cathmandooo wrote: »
    That's very interesting. What would be the point in taking out a 20 year mortgage if the 35 year one gives you a little more leeway? As in if you think at the moment that you'd be well able to make the repayments for a 20 year mortgage would you not be better off going for the 35 year, paying the 20 year repayment and leaving yourself a buffer if something happens in the future leaving you less able to meet the 20 year repayments?

    That's why I always advise people to take it over as long as possible and amend the repayments accordingly to finish it sooner and still have the peace of mind of being able to revert to lower repayments. Some people just like to take as short a term as possible because they think they won't arrange the overpayments or won't stick to them long term.


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    #36
    Ritchi
    Registered Users Posts: 319 ✭✭Ritchi


    Cathmandooo wrote: »
    That's very interesting. What would be the point in taking out a 20 year mortgage if the 35 year one gives you a little more leeway? As in if you think at the moment that you'd be well able to make the repayments for a 20 year mortgage would you not be better off going for the 35 year, paying the 20 year repayment and leaving yourself a buffer if something happens in the future leaving you less able to meet the 20 year repayments?

    Yes, assuming the bank allows you to take a 35 year mortgage(depends on your age), and you are organised enough to either overpay, or put the extra in a high interest account(one that is higher than your mortgage's interest) if you happen to be on a low interest mortgage.


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    #37
    flintash
    Registered Users Posts: 353 ✭✭flintash


    Cathmandooo wrote: »
    That's very interesting. What would be the point in taking out a 20 year mortgage if the 35 year one gives you a little more leeway? As in if you think at the moment that you'd be well able to make the repayments for a 20 year mortgage would you not be better off going for the 35 year, paying the 20 year repayment and leaving yourself a buffer if something happens in the future leaving you less able to meet the 20 year repayments?
    That sound exactly like my plan :D. You wont need to go to bank to re-mortgage or so, just drop overpayment if you wish/cannot pay.


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