Has anyone paid off their mortgage quickly?

lolli

Hey, thank you so much for that, I must check out the rate when I get home from work, its only for €37,000 at the moment so its not too bad. I didn't even really think about the interest rate, at the time I was only in the process of being made permanent in my job so that's why I couldn't go for a bank mortgage.

brendan86 wrote: »

6.9% is quite a difference over the 10 years. I take it your LTV on property would be like <50% and you should be able get 3% if you took out a mortgage..

I dunno how much the loan is for but say its for 100,000 @ 6.9% the overall interest you pay over the 10 years is 38,700.

Now if you were with a bank and 100,000 @ 3% over the 10 years total interest you pay is 15,800.

That's over 110% of a difference which is quite a difference. You are paying a extra 22,900 over the 10 years by going with credit union.

If your loan is for 50k just half the figures I put in total interest and its still a significant saving had you taken out a mortage.

Tombo2001

Something you have to understand when you take a loan is the concept of amortization.

For example - you borrow 200k at 5%.

If you repay over 20 years you will repay a total of 316k.
The monthly repayment is 1320.

If you repay over 35 years you will repay a total of 423k.
The monthly repayment is 1010.

Additionally - the idea of repaying the high interest loans first.....for me, I've only ever had 1 type of loan, that's the mortgage. If you cant meet year to year expenses (eg holidays or school fees) off year to year income; then you should spend less.

anewme

Paying mine off early.....though not saving much on the interest as its a low rate......mine should be 519 and Im paying 1,000 a month, will be finished in around 7 years.

Just want it gone.....

smokingman

Paid mine off once without even passing "Go" on the same round...fun times!

bmwguy

Madeleine Slow Buckle wrote: »

This is a good idea in theory. But what savings product do you have that is returning "well in excess" of 3%?
And is that after DIRT?

It's returning an average of 8% before taxation. It's an investment fund. I dug it out for someone earlier these are my returns since I started it. It's doing the business for me anyway now that there's about 40 grand in there it should grow nicely if it repeats. Leave it go for another 10 years or so adding to it monthly. Wasting your time keeping it on deposit. It's obviously not without risk though I accept that do maybe some people would prefer to just pay the mortgage off.

2010 14.99%
2011 - 3.25%
2012 14%
2013 13.91%
2014 12.34%
2015 9.64%
2016 5.66%



But it's not without risk like overpaying a mortgage is.

pwurple

bmwguy wrote: »

I hope you didnt change from an old car to an electric car JUST to save money? They are the future without a doubt but you are probably paying a few hundred a month on payments in line with how fast it is depreciating

If you chose a new electric car over a new combustion engine car becuase you wanted a new car then thats possibly a good move. Buying new cars is rarely a financially sound move for most people but it is nice to have a new car all the same.

No, not just, but it was a very large factor.
Whoever asked, it was a Nissan Leaf, we have it since early 2015.

We needed to replace the car anyway at the time, it wanted 2k in repairs, timing belt and some other stuff, it was 13 years old.. I personally didn't take out a loan for the car, we have been saving for a car anyway for a few years, so I diverted that monthly saving amount into the mortgage. But if I had... by my savings tracker, the car would pay for itself outright in just over 3 years. There's no way it depreciates to zero in 3 years.

There are second hand electrics available, the same as any other. Every car depreciates.

Anyway, I'm very happy with it, it saves us thousands every year, and takes decent chunk out of the mortgage term. If you write down how much you spend on your car.... everything now, fuel, servicing, repairs, the lot. And see how much goes when you switch to electric.

I think everyone should have a financial plan. We have one, with assets / liabilities listed, monthly outgoings, and goals. We check it every few months and see if we're on track. Childcare is my bugbear... but they won't be this young forever. I've done that since my very first job at age 16, and it's worked for me. I'm an average irish mammy in my 30's with a husband, a couple of kids and a reasonable job, living in cork. No inheritances, no handouts. Just keeping our eye on the financial ball. It's worked out ok so far for us, and some of our like-minded friends. I'll let you know when we get to our 60's if we're still in good shape.

SozBbz

BOI have a decent calculator online to tell you exactly what either a once off payment/monthly over payment would mean for your motgage which is really handy.

I'm fixed currently but they allow me to overpay 10% each month, which I don't even notice, its only about €80, but even that amount makes a difference, apparently it will knock 5 years off my term and save me almost €25k over the course of the mortgage in interest.

I'll be making a lump sum payment when my fixed term is up and after than I'll be shopping around for a better rate. I don't plan to fix again or if I do, it will be for a shorter term than my current term (3years, which I've 1 year and 3 months left on).

brendan86

lolli wrote: »

Hey, thank you so much for that, I must check out the rate when I get home from work, its only for €37,000 at the moment so its not too bad. I didn't even really think about the interest rate, at the time I was only in the process of being made permanent in my job so that's why I couldn't go for a bank mortgage.

It could be worth looking into KBC they offer 3,000euro switcher deal to cover fees etc which may only cost 1,500 and you get to keep the remaining.

Now I dunno if your eligible with such a small mortgage of 37,000, if you were it would be a pretty sweet deal. I do know there minimum mortgage requirement is 30k so you may be able.

Tombo2001

No disrespect to any of the ace investors out there but here are the regarding asset market returns at present:

(I) Returns on (close to) zero risk investments, such as cash on deposit, are close to zero.

(II) People saying that they've found funds that have done brilliant should caveat that with "Investment prices can fall as well as rise".

(III) Stock markets have gone up steadily for the past five years. It doesn't take a genius to find a fund that will rise in value in that environment.

The previous five years, stock markets fell quite dramatically. They might do the same between now and 2022.

The question is about whether to pay off a mortgage early.

If the answer is - no because you can great returns if you are "savvy about investments" - sorry but there is a lot of colour and detail that that needs to be filled in around that.

Its pretty easy to be savvy when markets are going up. Less so when they are falling. No one here know what stock markets will do in the next five years.

pwurple

Tombo2001 wrote: »

Additionally - the idea of repaying the high interest loans first.....for me, I've only ever had 1 type of loan, that's the mortgage. If you cant meet year to year expenses (eg holidays or school fees) off year to year income; then you should spend less.

I agree in general with this, I prefer to save for things, but sometimes life throws something unexpected at you. I wouldn't be that smug about being fortunate in that regard.

Funeral costs or travel to be somewhere at end of life. Unexpected healthcare costs. Car is banjaxed when you need it for work. All your clothes (which you need for work) are wrecked in a flood, and insurance won't pay out for a year.

Sh*t happens in life, all of the above have happened to me, and a short loan can be necessary. That's when to stop overpayments, grab a loan if needed, and pay that down instead. Then get right back on track.

Tombo2001

pwurple wrote: »

I agree in general with this, I prefer to save for things, but sometimes life throws something unexpected at you. I wouldn't be that smug about being fortunate in that regard.

Funeral costs or travel to be somewhere at end of life. Unexpected healthcare costs. Car is banjaxed when you need it for work. All your clothes (which you need for work) are wrecked in a flood, and insurance won't pay out for a year.

Sh*t happens in life, all of the above have happened to me, and a short loan can be necessary. That's when to stop overpayments, grab a loan if needed, and pay that down instead. Then get right back on track.

I'd agree to some degree; but I would feel personally that people should have a 'margin' built into whatever savings they have so that they have enough to cover the small unexpected events.

No more so than redundancy. How do you pay the mortgage if you are let go.

Car - for me, even more than the mortgage - people just don't work out how much they are spending on cars. Between buying the vehicle, repairs, insurance, tax, petrol....on an annual basis how much its costing. Especially if you are a two car family. I haven't had a car for 10 years; I reckon its saved me 40k (any half decent car car will cost you 4k per annum between depreciation, fuel, insurance, tax, servicing, nct, tyres, repairs). I can get around by bike 99.5% of the time for any journeys I might have made by car. And its better for you.

bmwguy

Tombo2001 wrote: »

No disrespect to any of the ace investors out there but here are the regarding asset market returns at present:

(I) Returns on (close to) zero risk investments, such as cash on deposit, are close to zero.

(II) People saying that they've found funds that have done brilliant should caveat that with "Investment prices can fall as well as rise".






I definitely put that caveat in my posts it is not without risk to my capital what I am doing. I'm not savvy at all I did consider choosing my own investments in stocks but wouldnt have the patience or attention to detail to do it so i went down the managed fund route.
Although stock market returns long term have been very positive over 100 years. I do see some short term risk to capital but not worried long term. Even the 2008 crash was recovered in 3 to 4 years whereas housing hasn't.

Sorry for divergence but these are the reasons I don't think paying off a mortgage at low interest rates is a good idea when there is better use for
My cash. In my opinion anyway. As I said earlier I will probably use it to knock last 10 years off my mortgage.

SozBbz

So, I've just been inspired by this thread to call BOI and ask what I can do about my current fixed mortgage @3.6%. I've 1 year 3 months to run on my fixed term. So they'll charge me aprox €500 to break out, but I can immediately re-fix at 3%, which saves me €1300 versus seeing out the rest of my 3 year fixed period, so net I'm €800 better off by making a phonecall.

Also I found out that if I want to pay off €10,000 during my fixed period, the penalty is about €25, so thats also totally worth doing

Cyrus

tell you what folks im all for keeping your mortgage term reasonable and being sensible about debt, but some of you dont half sound miserable

as some other posters have said you have to balance living your life with paying the mortgage down, we are all going to die, it could be tomorrow, and much like people saying you will never wish that you worked more when you are on your death bed, i doubt you will wish that you saved more.

Cyrus

SozBbz wrote: »

So, I've just been inspired by this thread to call BOI and ask what I can do about my current fixed mortgage @3.6%. I've 1 year 3 months to run on my fixed term. So they'll charge me aprox €500 to break out, but I can immediately re-fix at 3%, which saves me €1300 versus seeing out the rest of my 3 year fixed period, so net I'm €800 better off by making a phonecall.

Also I found out that if I want to pay off €10,000 during my fixed period, the penalty is about €25, so thats also totally worth doing

now that is interesting (the second part that is)

effectively you can make extra lump sum payments on a BOI fixed mortgage then?

SozBbz

Cyrus wrote: »

now that is interesting (the second part that is)

effectively you can make extra lump sum payments on a BOI fixed mortgage then?

I asked for the penalty on €10k which was just under €25, and €20k, whcih was just under €50, so it seems proportionate.

I don't know if the amount of my mortgage is relevant but I owe about €190k and am 21 months in (to a 35 year term - although I've already been overpaying 10% per month which has already shortened that somewhat).

They caveat it by saving the cost fluctuates from day to day, but that would be indicative, so just give them a call on the day you want to pay the lump sum to confirm the rate is somewhere in that ballpark.

Cyrus

SozBbz wrote: »

I asked for the penalty on €10k which was just under €25, and €20k, whcih was just under €50, so it seems proportionate.

I don't know if the amount of my mortgage is relevant but I owe about €190k and am 21 months in (to a 35 year term - although I've already been overpaying 10% per month which has already shortened that somewhat).

They caveat it by saving the cost fluctuates from day to day, but that would be indicative, so just give them a call on the day you want to pay the lump sum to confirm the rate is somewhere in that ballpark.

ok thanks for that, im moving to a BOI fixed mortgage shortly, that was the one thing i needed to speak to them about, its reminded me!

Bellview

SozBbz wrote:

I'll be making a lump sum payment when my fixed term is up and after than I'll be shopping around for a better rate. I don't plan to fix again or if I do, it will be for a shorter term than my current term (3years, which I've 1 year and 3 months left on).

With boi I was going to switch to kbc but since boi dropped rates I have not changed. One reason for not changing is I would have been on variable while moving over to kbc and the extra interest costs would eat up some of the 3k goodness
What we did was split mortgage in 2. One with 2 year fixed and the other 3 year fixed. Both are at the same interest rate. All going well we will pay off a lump again in 2 years time ..as it allows us keep rainy day fund in place. It also gives some protection if interest rates rise.
What I found is that banks are more reactive on sharing what is best for your finances which for folks not savvy with numbers can be expensive.. and a lot of folks are not as savvy as the banker.

In the spirit of diversity
- I overpay the mortgage to an extent
- save to an extent
- invest to an extent
- feed a decent executive pension

I'm hoping to have the 30 year mortgage paid off 8/10 years early ..... I can access the pension from age 50 if needs be so that allows me to "save" less than I otherwise would.

kyeev

Paid off my mortgage about 6 months ago (age 40).
No great trick to it, built a house rurally in the crash (2009/2010), had decent lump sum deposit, 10 year mortgage, horsed every spare penny into it.
Paid it off 3 years early.
Saved about ~25k in interest.
Lived fairly frugally in fairness but don't drink(much)/smoke/gamble so it wasn't that hard.
Key was I started saving the day I started work thanks to the Charlie McCreevy save 3 euro and I'll give you a free euro scheme.
Thanks to the savings kick start that gave me, I had a sizable deposit saved by the time I was in my early 30s.
Was living in shared rented accomodation for over 10 years which allowed me to keep saving while renting.
No magic bullet here just one good choice made in my early 20's to start saving.

Now, I have to start worrying about the pension...

rsynnott

tedpan wrote: »

Definitely switch down to a 20 year. The interest on 35 is just nuts.

Alternatively, leave it at 35, but overpay as if it were 20 (or whatever your target timespan is). The proper amount to overpay can be figured out quite easily with http://drcalculator.com/mortgage or similar. That way, if you continue the overpayment, you're done in 20 years and you've paid the same amount of interest as you would have on a 20 year loan, but if for whatever reason you need to reduce payments for a while, you can just go back to your real payments without asking the bank.

This only works if you're on a variable rate, of course.

EDIT: Oops, people already said this, should've read to the end before commenting

rsynnott

bmwguy wrote: »

Would you consider building a fund through saving? If you can get a return in excess of the mortgage rate and don't mind investing it's an option. I have one going now a few years and it's returning well in excess of the 3% interest rate I have on the mortgage. So I think my money is better off going there. I reckon in 12/15 years time it will be enough to clear my mortgage if the markets go well meaning a 35 year mortgage will be cleared in 18 years or so.

You actually need to be making over _6%_ on your investment for this to make sense (assuming you're higher rate), because your investment income is taxable.

brendan86

Bellview wrote: »

With boi I was going to switch to kbc but since boi dropped rates I have not changed. One reason for not changing is I would have been on variable while moving over to kbc and the extra interest costs would eat up some of the 3k goodness
What we did was split mortgage in 2. One with 2 year fixed and the other 3 year fixed. Both are at the same interest rate. All going well we will pay off a lump again in 2 years time ..as it allows us keep rainy day fund in place. It also gives some protection if interest rates rise.
What I found is that banks are more reactive on sharing what is best for your finances which for folks not savvy with numbers can be expensive.. and a lot of folks are not as savvy as the banker.

I am sorry but how do you make out BOI rates are better than KBC? KBC have some of the most competitive rates for new customers including fixed and variable.

SozBbz

brendan86 wrote: »

I am sorry but how do you make out BOI rates are better than KBC? KBC have some of the most competitive rates for new customers including fixed and variable.

I got offered 3% for 2 year fixed on the phone with them earlier today.

What are KBC offering?

listermint

SozBbz wrote: »

I got offered 3% for 2 year fixed on the phone with them earlier today.

What are KBC offering?

2.9 i believe

Cyrus

SozBbz wrote: »

I got offered 3% for 2 year fixed on the phone with them earlier today.

What are KBC offering?

no 2% cashback with KBC though

brendan86

SozBbz wrote: »

I got offered 3% for 2 year fixed on the phone with them earlier today.

What are KBC offering?

I think its 2.99% 2 year fixed if you sign up to the current account deal. And you get 3,000 switcher deal. I just dunno what bellview was on about the interest rate would eat the goodness out if he switched and there same rates.

BOI fixed rate might be all well and good signing up now but do you know what variable rate you will be on after, its a lot worse than KBC thus more costly in long run.

SozBbz

listermint wrote: »

2.9 i believe

I'd just think that 0.1% might not merrit the hassle of switching just yet. I'd have to switch my current AC also, and while I know they have people to help this happen, a friend of mine did this recently and it was anything but a smooth process.

Its something I'll review over the course of the mortgage - I won't be someone just sitting there paying whatever rate they charge me!

pwurple

Cyrus wrote: »

tell you what folks im all for keeping your mortgage term reasonable and being sensible about debt, but some of you dont half sound miserable

as some other posters have said you have to balance living your life with paying the mortgage down, we are all going to die, it could be tomorrow, and much like people saying you will never wish that you worked more when you are on your death bed, i doubt you will wish that you saved more.

Lol, Well, we're Irish, so we don't like to gloat.

Naw, we have it pretty good. I think concentrating on a goal and seeing results is very satisfying.

Sure, we didn't take a foreign holiday for a few years when childcare was crippling us, because we reasoned that babies don't remember holidays anyway. But now, yup, we take a holiday. It might be camping, but it's still fun.

We eat well, because we are good cooks, and go out to eat once a month, or more if we can. And we have a cleaner. That's defo luxury. We have a nice house, in a lovely area with a decent garden, and a reasonably new car. A healthy family, and without crucifying debt. I'm fairly proud of it tbh. I wouldn't call myself miserable! It's been work and dedication, but I'm pretty chuffed with the results.

On my death bed, I hope my kids will appreciate the decent life we tried our best to provide for them, which, yes, includes savings and hopefully some knowledge on how to do the same as we did.

SozBbz

brendan86 wrote: »

BOI fixed rate might be all well and good signing up now but do you know what variable rate you will be on after, its a lot worse than KBC thus more costly in long run.

Well I plan to never really pay their variable rate. I'll either keep fixing for 1 or 2 years at a time (won't do more than that again) and shop around if I feel theres better value to be had when my fixed periods are coming to an end.