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Breaking up the Mortgage payment.

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  • 06-06-2013 12:12am
    #1
    OU812
    Registered Users Posts: 6,047 ✭✭✭


    Just wondering if anyone has any experience of this.

    Currently the wife is the sole earner in the home. She's paid weekly. Out mortgage is the one big monthly cost coming out of the account, everything else is paid weekly (inc utilities to keep a flat rate of payment).

    Our mortgage is currently €1145 PM. Multiply this by 12 & divide by 52 & it breaks down to a weekly amount of €264.23.

    I reckon we could stretch to a weekly payment of €300 which would give us prepayments of €35.77 a week or €1860 a year assuming interest rates stay the same, which we know they won't but for this purpose, they will.

    Obviously things will change over time & we'll adapt to that. We'd be increasing the charges incurred by our bank, but the offset is that we pay off our mortgage earlier.

    The lender in this instance is PTSB

    Thoughts ?


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    #2
    murphaph
    Registered Users Posts: 19,020 ✭✭✭✭murphaph


    Tracker or SVR? If tracker and it's a "good" margin then I'd carefully consider your plan. You can get better rates on deposit so by overpaying a good tracker you are actually costing yourself money as you could have made more interest on deposit than saved by overpaying! You could save up a lump sum and pay that off (with the extra interest) your mortgage annually for example.

    If it's an SVR you should overpay if you can afford to, but we keep 5k cash in the bank at all times just for emergencies. People should always consider a couple of k as a rainy day fund to fix that broken down car or whatever.


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    #3
    OU812
    Registered Users Posts: 6,047 ✭✭✭OU812


    It's an SVR. I'm actually in the process of moving banks so I may just not set up the DD in the new bank & set up standing orders instead.

    On paper & in my head it makes sense, practically though I'm not sure. It would certainly be more manageable.


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    #4
    okiss
    Registered Users Posts: 698 ✭✭✭okiss


    Hi OU812,

    What you are planing to do is a good idea.
    Before you start to do this I would do the following.
    Go on to the nca website and use the budget planner to establish what your expenses are and that you can afford to do this. Also continue to keep funds for emergencies and put money into this account on a regular basis.

    I would advise you to contact your bank before doing this.
    I would explain to them that you want to payment x amount every two weeks off your mortgage and that you want the over payment your making to be paid off the principal every 2 weeks.
    I would also send a registered letter in writing confirming this and include the name of the person you spoke to about this along with the date and time of the call. Keep a copy of this letter for your own records.
    Some banks will just have an over payment go into a holding account and will only adjust the principal with this over payment every 6 months or a year.
    You may find out that your bank only adjusts the principal every 12 months. If this is the case open up a high interest regular savings account and put the over payment into this each month. Then at the end of 12 months send a bank draft for the amount saved along with the interest to the bank mortgage department with a registered letter saying that you want x amount paid off the principal your mortgage.
    If you can get this over payment going on to your principal you will end up paying less interest and have your mortgage paid off quicker.


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