Paying of Mortgage early-how much does it cost?

thebourke

I have recently applied for an 85k mortgage over a 15 year period at an apr rate of 4%.Mortgage repayments will be approx 625euro per month...
My mortgage has been aproved.
However, in about 6/7 months time I could be getting a lump sump payment of 85k
from one of my relations...I would then use this 85k to pay of my mortage in full
The question i want to know is how much would the bank charge me for having a mortgage over that 6/7 month period?

phormium

Multiply the amount by the rate, divide by 12 and multiply by how many months you expect to have it and that will roughly be the cost of the rent of the money so to speak. The balance outstanding when you come to pay it off will take into account any capital you will have paid as well as interest but that will be miminal in that length of time. The difference between the monthly repayment and the monthly interest cost is capital payment. However you will also have the legal cost of taking out a mortgage that you are only keeping for a short time.

thebourke

what do you mean by
" you will also have the legal cost of taking out a mortgage that you are only keeping for a short time. "

phormium

There are legal fees involved with taking out a mortgage, the bank is being given a mortgage on a property, they require legal work to be done for this, ask your solicitor how much this is costing. Normally it's good value obviously if you are going to have a mortgage for 20 yrs or so but it's a lot to pay out for a very short term loan.

thebourke

so what should i do...obviously i would prefer to have the 85k now and not have a mortgage rather than 6/7 months down the line.....could the banks come afte me for extra money if the mortgage is paid up in full within 6 months?

The_Morrigan

thebourke wrote: »

so what should i do...obviously i would prefer to have the 85k now and not have a mortgage rather than 6/7 months down the line.....could the banks come afte me for extra money if the mortgage is paid up in full within 6 months?

Can you wait the 6/7 months for the lump sum rather than get the mortgage?

Mezcita

thebourke wrote: »

so what should i do...obviously i would prefer to have the 85k now and not have a mortgage rather than 6/7 months down the line.....could the banks come afte me for extra money if the mortgage is paid up in full within 6 months?

Depends on the mortgage you go for. Some of them might charge you a fee if the balance is paid up early. While others only allow a set amount to be overpaid each month.

As suggested above I'd hold fire and wait for the lump sum.

thebourke

it's a variable rate i am on...i am due to formally receive the loan offer next week...

The_Morrigan

thebourke wrote: »

it's a variable rate i am on...i am due to formally receive the loan offer next week...

Noone here can tell you what the bank will do, you need to ask the bank what terms and conditions are attached to your loan and if you can overpay or repay early without penalty.

I would seriously consider if you can wait the six months as you rarely get to close on a house in a very short time frame because of the legal processes involved.

roro2

You cannot be charged for paying off a variable rate mortgage early regardless of the timeframe, except for a small early security release fee.

The legal costs + stamp duty will probably be €2-3k which are going to larger than the total amount of interest for 6 months.

Larbre34

Would you PM me where you got the 4% APR please, Im looking to move a 65k outstanding mortgage, thanks

thebourke

to get this rate of 4 percent from UlsterBank, you need to have a LTV ration of <60% and you also you need to have a ufirstaccount..
see below....
http://www.ulsterbank.com/roi/personal/borrowing/mortgages/important-information/rates.ashx