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Pay off mortgage?

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  • 15-04-2013 6:25pm
    #1
    jamesbil
    Registered Users Posts: 662 ✭✭✭


    Hi all,
    Looking for some advice here. I have about €24000 left on a mortgage paying €300 p/m, so under 8 yrs to pay.
    I am in the fortunate position to be able to pay off the balance.
    My question is; is it better to pay it off now or keep the capitol in the bank and earn interest?

    Thanks
    James


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    #2
    Taxburden carrier
    Registered Users Posts: 555 ✭✭✭Taxburden carrier


    You are not going to get a return on your savings that will come nea r the interest you would pay, assuming you are not on a tracker.


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    #3
    jamesbil
    Registered Users Posts: 662 ✭✭✭jamesbil


    Interest on savings is 2.45 on first 20k, 1.85 after that, mortgage int is variable, currently 4.3? tho isn tinterest paid off first on a mortgage? leaving just balance to pay?


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    #4
    murphaph
    Registered Users Posts: 19,020 ✭✭✭✭murphaph


    jamesbil wrote: »
    Interest on savings is 2.45 on first 20k, 1.85 after that, mortgage int is variable, currently 4.3? tho isn tinterest paid off first on a mortgage? leaving just balance to pay?
    No. So long as you owe them the 24k on a variable rate repayment mortgage (not endowment etc.) then you are paying 4.3% or so of that this year in interest and next year 4.3% (or whatever it is then) of the remaining balance etc.

    With those rates and if you have no reason to believe you'll need the cash soon then it's a no brainer to clear your mortgage now.


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    #5
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    Variable rate mortgage so no penalty for early repayment, its at a higher rate than you can get by saving the money so financially better to pay off mortgage.


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    #6
    daheff
    Registered Users Posts: 5,864 ✭✭✭daheff


    you can probably get reasonably better rates than that on your savings (KBC give 3% over 3k)

    A couple of things to ask yourself
    1- If you clear the mortgage do you have any savings left?
    2- do you need the savings for anything in the next few years?
    3- Is it financially better to save or pay off the mortgage? Could you invest your savings and get a better return than you mortgage int rate?
    4- Is part paying off the mortgage a better idea? (Ie pay 12k off mortgage and keep the rest in savings) - If you did that your repayment would be less...you could then either over pay or keep the savings to make another part payment in a few years /months.


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