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AVC vs Mortgage Overpay (variable rate)

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  • 19-01-2014 7:45pm
    #1
    SS_Rat
    Registered Users Posts: 4 ✭


    Hi All,

    might be a no-brainer, but interested to hear your thoughts on whether it would be better to invest in a group AVC scheme (am a public sector employee) or overpay my (large and negative equity) mortgage. Details:

    Have 200euro per month to put to this. Mortgage outstanding is 420,000 over 27 years (house worth approx 300k), at variable rate of 4.6% (2270euro per month). I calculate that I would save 53k on interest alone by overpaying 200euro per month, and reduce the term by about 4 years.

    Of course, taking into account inflationary effects on the real cost of the mortgage over 27 years (i.e. will 2270euro still amount to a hill of beans in 26 years time...?), and the compounding interest effect on 200euro put into an AVC (managed fund with 70% Govt contribution & ability to invest in ARF at retirement, but with fund management charges, moderate risk, etc.), I'm uncertain which is the best option.

    Thoughts warmly welcome!


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    #2
    mel.b
    Registered Users Posts: 3,130 ✭✭✭mel.b


    I'd be interested in hearing others opinions about this as well as am in a similar situation.


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