Mortgage free age

Wesser

One of the banks I applied to said that they would be happy to spread out my repayments past 65 if I had a good pension in place.

f@steddie

TheAnalyst_ wrote: »

It's not a big deal to be mortgage free. Some people are obsessed about it. After 20 years of a mortgage your interest payments will likely be a few percent of your household income due to inflation. Why put yourself through ten years of misery in the prime of your life?

Common misconception. You don't have to "put yourself through ten years of misery in the prime of your life". Just a few tweaks in your approach and less consumerism is all it takes.

One_Of_Shanks

macnug wrote: »

Mortgage free since 32, hate to burst your bubble but I personal don't see a massive difference not having rent/mortgage to pay, money just gets swallowed up in other places, I suppose if you had a massive mortgage you'd notice it but I really don't.

I suppose the key is in your last sentence.

It's all relative to the size of the mortgage.

When we lived in Dublin our mortgage was around 1,100 per month and going from that to mortgage free would have had a massive impact on our quality of life.

Now we live in a rural area and our mortgage is around 280 per month so if it suddenly vanished I'd be delighted but would it change our lives? Not so mucn.
Maybe we'd go out for a family meal once per week with the extra money. Not sure that qualifies as a vast improvement so I see your point.

However, the main reason why a lot of people are a tad obsessed with it is that if circumstances change through ill-health or loss of job etc then it's a huge cushion to know that you own your own house, the bank don't.
So if anything goes wrong in that regard you don't have to worry about losing your home/having to move etc....

It's for the latter reason that I have been putting all the money I can towards getting ours down and only now that it's at a more manageable figure have I stopped paying off so much and started going out more as a family etc.

It is a big worry for a lot of people about "what if" so I can fully understand the way some people focus on paying it off or reducing it as much as they can.

I imagine if/when I clear ours I'll be here saying similar about it not making much difference, but for someone in the opposite camp with a big mortgage they're probably reading some of the comments like this and thinking WTF?

TheAnalyst_

elperello wrote: »

TheAnalyst_ wrote: »

You will always have maintenance costs which are about 1% of the value which you don't pay when you're renting. Plus property taxes. Both of these will dwarf any mortgage payments near the end of the annuity period.

Even taking your figure of 1% for maintenance  which in my experience is over generous the total cost of living in a 300k house comes to c. 3.4k per year. Unlikely to find a 300k house to rent for that.

The point of paying off early is that you don't get to the end of the annuity period.

That's the best bit. Rents go up. Wages go up. Your mortgage is locked in from year 0 (exclusing rate variations) . 
There is no point to paying it off early

FaganJr

43, tracker, 400 pm, no other debt. Not concerned when I pay it off, as it's small money. 90k to go on 160k borrowed in 2002.
40k in savings plan to build small house on owned site in the future.
Would have thought I'm comparable to alot of others??

TheAnalyst_

One_Of_Shanks wrote: »

macnug wrote: »

Mortgage free since 32, hate to burst your bubble but I personal don't see a massive difference not having rent/mortgage to pay, money just gets swallowed up in other places, I suppose if you had a massive mortgage you'd notice it but I really don't.

I suppose the key is in your last sentence.

It's all relative to the size of the mortgage.

When we lived in Dublin our mortgage was around 1,100 per month and going from that to mortgage free would have had a massive impact on our quality of life.

Now we live in a rural area and our mortgage is around 280 per month so if it suddenly vanished I'd be delighted but would it change our lives?  Not so mucn.
Maybe we'd go out for a family meal once per week with the extra money.  Not sure that qualifies as a vast improvement so I see your point.

However, the main reason why a lot of people are a tad obsessed with it is that if circumstances change through ill-health or loss of job etc then it's a huge cushion to know that you own your own house, the bank don't.
 So if anything goes wrong in that regard you don't have to worry about losing your home/having to move etc....

You do know that you are probably paying insurance for those situations.

Yourself isit

TheAnalyst_ wrote: »

It's not a big deal to be mortgage free. Some people are obsessed about it. After 20 years of a mortgage your interest payments will likely be a few percent of your household income due to inflation. Why put yourself through ten years of misery in the prime of your life?

My mortgage costs me 900 pm. That a been true for about 3 years and it's about the same % of my income.

For inflation to eat into this then you have to have inflation.

Yourself isit

FaganJr wrote: »

43, tracker, 400 pm, no other debt. Not concerned when I pay it off, as it's small money. 90k to go on 160k borrowed in 2002.
40k in savings plan to build small house on owned site in the future.
Would have thought I'm comparable to alot of others??

But that depends on the tracker. If you were paying retail rates now you would be paying double.

TheAnalyst_

Yourself isit wrote: »

TheAnalyst_ wrote: »

It's not a big deal to be mortgage free. Some people are obsessed about it. After 20 years of a mortgage your interest payments will likely be a few percent of your household income due to inflation. Why put yourself through ten years of misery in the prime of your life?

My mortgage costs me 900 pm. That a been true for about 3 years and it's about the same % of my income.

For inflation to eat into this then you have to have inflation.

http://www.inflation.eu/inflation-rates/ireland/historic-inflation/cpi-inflation-ireland.aspx
And the long term?

One_Of_Shanks

TheAnalyst_ wrote: »

You do know that you are probably paying insurance for those situations.

Me personally? No, well unless I die.
We pay very little insurance other than our car. House insurance in case it burns down and thats about it.

It was a conscious decision to not take out policies against loss of earnings etc after getting quotes for same, and instead to save like hell and get the mortgage down with every penny for a while.

I'm not advising this for anyone else by the way. Just the way we decided to go.

Yourself isit

TheAnalyst_ wrote: »

http://www.inflation.eu/inflation-rates/ireland/historic-inflation/cpi-inflation-ireland.aspx
And the long term?

We seem to be in an era of permanent low inflation. If not then tracker mortgage holders will eventually be in trouble as interest rates track inflation.

Carlosthejakal

I will be 57 if I keep with my current repayments, although my mortgage is small at 750 per month.

ted1

TheAnalyst_ wrote: »

That's the best bit. Rents go up. Wages go up. Your mortgage is locked in from year 0 (exclusing rate variations) . 
There is no point to paying it off early

I paid 17 euro off it last month. Ends up that will save me 80 euro in repayments !!!

Every point in paying it off early.

FaganJr

Yourself isit wrote: »

But that depends on the tracker. If you were paying retail rates now you would be paying double.

Agreed, but I'm not!

jethrothe2nd

We are 5 years into a 25 year mortgage so I'll be 63 before it is done. If we continue overpaying as we are now it will be 57.

mikeymouse

First mortgage aged 28 in 1986 ; endowment @ 105% ltv (I kid you not)
Promised endowment policy would pay off loan plus surplus of 40k
house doubled in price in 5 years
Too good to be true? it was.
early 90s price collapsed again.
interest rates up to 14%.
Advised half way through ,endowment would not pay off capital.
no mis-sold compensation
Changed to part repayment with 10 years to go.
Upped repayments again with 5 years left.
Barely cleared loan.
Boy. was I glad when mortgage free!!!

dbagman

At 32 I'm currently a whole 4 months into my 33 year mortgage. 65. Yippee!!

Heisenberg1

ted1 wrote: »

I paid 17 euro off it last month. Ends up that will save me 80 euro in repayments !!!

Every point in paying it off early.

I do that myself every little helps and all that.

Bandana boy

ted1 wrote: »

I paid 17 euro off it last month. Ends up that will save me 80 euro in repayments !!!

Every point in paying it off early.

if that is true you currently have the worst morgtage deal in the country !

Did you put your morgtage on your credit card !
You are clearly mistaken

ted1

Bandana boy wrote: »

if that is true you currently have the worst morgtage deal in the country !

Did you put your morgtage on your credit card !

No I'm currently on a 3.8% rate

Repayments were 922.71 dropped by about 26c
26c*12 months *25 years remaining.

I was shocked when I did the maths to, but don't forget it's compound interest if 3.8% for 25 years.

Bandana boy

ted1 wrote: »

No I'm currently on a 3.8% rate

Repayments were 922.71 dropped by about 26c
26c*12 months *25 years remaining.

I was shocked when I did the maths to, but don't forget it's compound interest if 3.8% for 25 years.

You will save ~€16 in interest euro paying of 17 euro on your loan early

Bandana boy

In your case at such a bad interest rate , i would pay of as much as I could early , as soon as you get out of negative equity you should be able to renegotiate the loan to something more reasonable


Folks on trackers you could argue would do better to invest spare cash as it will probably outperform the cost of the tracker

ted1

Bandana boy wrote: »

In your case at such a bad interest rate , i would pay of as much as I could early , as soon as you get out of negative equity you should be able to renegotiate the loan to something more reasonable


Folks on trackers you could argue would do better to invest spare cash as it will probably outperform the cost of the tracker

Negative equity ? I bought in 2012 my LTV is about 30%!!!!

It's a 3 year fixed till Dec 2017. Variables were much higher in 2014.

ted1

Bandana boy wrote: »

You will save ~€16 in interest euro paying of 17 euro on your loan early

.26c a month for 12 months for 25 years =78 euro.

Bandana boy

If 17 euro drops your payments by 26 cent

922.71 divided by 26 cents is 3549

3,549 times 17 euro is 60k

So pay 60k and you clear your morgtage , clearly a mistake in your calculations

Bandana boy

It possible it's 17 extra every month , and doing this on a fixed rate has a huge penalty attached as 17 every month should save you 190 euro in interest

black & white

51 for me, thankfully

TheAnalyst_

Your sums are way off but its a good example of the financial ceaselessness of the "pay it off as early as possible" crew. 
Your sums should include current investment rates. You are nearly always better off putting your additional money into a pension fund. Particularly if, like me, you're paying a very low rate (1.4%).

ted1

TheAnalyst_ wrote: »

Your sums are way off but its a good example of the financial ceaselessness of the "pay it off as early as possible" crew. 
Your sums should include current investment rates. You are nearly always better off putting your additional money into a pension fund. Particularly if, like me, you're paying a very low rate (1.4%).

My sums are based on the statement from the bank stating what my new repayments will be.

I have a company pension but top with an AVC what I do is dump 50% of every pay increase into it. So this year I'll get a 2.75% so will increase my payments by 1.375%

With 1.4% you right saying no point but if you are paying more you may aswell, especially if it's disposable cash that will just be squandered.

ted1

Bandana boy wrote: »

It possible it's 17 extra every month , and doing this on a fixed rate has a huge penalty attached as 17 every month should save you 190 euro in interest

It was a once off payment and the letter giving the new rate stated that there is no penalty thus time but that there may be next time.
We are planning an extension so will wait till December when the fixed rate is up and then move to a new rate/ bank.