Mortgage term 25 or 30 years?

enfant terrible

Looking to draw down my mortgage soon.

For 25 years its 790 per month

For 30 years its 717 per month

If I take the 30 year and overpay the difference(73 euro) between the two each month, will I pay the same interest over the term of the mortgage?

Thanks

kippy

enfant terrible wrote: »

Looking to draw down my mortgage soon.

For 25 years its 790 per month

For 30 years its 717 per month

If I take the 30 year and overpay the difference(73 euro) between the two each month, will I pay the same interest over the term of the mortgage?

Thanks

You will pay a lot more interest over the 30 year term. I find this a good resource:
Karl's Mortgage Calculator, Ireland - Dr Calculator

st1979

kippy wrote:

You will pay a lot more interest over the 30 year term. I find this a good resource: Karl's Mortgage Calculator, Ireland - Dr Calculator

That is not the question. He is overpaying a 30 year mortgage to the same level as a 25yr mortgage. You will pay same interest as a 25 year mortgage. But if problems come down the road it will be easier to drop repayment to a 30yr term. Then trying renegotiate a 25 yr term to a 30

enfant terrible

st1979 wrote: »

That is not the question. He is overpaying a 30 year mortgage to the same level as a 25yr mortgage. You will pay same interest as a 25 year mortgage. But if problems come down the road it will be easier to drop repayment to a 30yr term. Then trying renegotiate a 25 yr term to a 30

Thanks st1979,

So there is no disadvantage in taking the 30 year mortgage as long as you overpay each month or pay a lump sum at end of the year?

Browney7

Interesting question. Maybe ask the bank for a projection?

You'll pay more for mortgage protection cover as you'll essentially have more cover on the policy at all stages after year one (assuming you set up the policy with a 30 year term).

Also, if you ever try to fix your rate in the future it may be harder to over pay then.

homer911

Some banks may also not directly apply the overpayment to the principal - it may remain sitting in a service account - you would need to check with your bank what their policy is

enfant terrible

homer911 wrote: »

Some banks may also not directly apply the overpayment to the principal - it may remain sitting in a service account - you would need to check with your bank what their policy is

So what would happen if its put in a service account, would it ever get applied to the principal?

I'm going with AIB if anyone know if they apply it to the principal?

ike

Every bank if different, just ring them and ask what their policy is.

For example I'm with EBS and any overpayment I make stays as a credit in my mortgage account.

I need to instruct them in writing to apply the credit against the principal. I would prefer if it could be done automatically but c'est la vie!

phormium

You still save interest though even if it is just showing as a credit on the account.

The only disadvantage of what OP wants to do is the increased mortgage protection term but I think that is worth it for the extra flexibility the longer term gives, you just pay the higher payment and it ends in 25yrs but if anything happens that you can't pay the higher you can just drop back to the correct payment without any hassle.