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Reduce Mortgage term by 5 years.

  • 17-02-2022 1:32pm
    #1
    fconno316
    Registered Users Posts: 25 ✭


    Hi,


    I am currently with Bank of Ireland on a fixed 5 year (30 year mortgage). This is coming to and end in April of this year, so i have started the process of switching.

    Given the current financial situation worldwide I'm looking to fix again for another 5 years(prefer knowing what is going out every month).

    My situation has changed from what it was 5 years ago, and my ltv is greater given the current housing market.


    In doing the calculations i have come across a situation, and im sure i am not the only one so looking for some input.


    looking at AIB Green mortgage rate of 2.1% and ltv i will greatly reduce my monthly repayments over 25 years.

    if i reduce my mortgage from 25years to 20years, i will effective pay the same (50 increase).

    I can come up with a number of pros for doing this, 5 years less mortgage and paying less interest etc.

    However i want to going in eyes open and i am struggling to come up with any downsides.


    has anyone had any experience in this situation?



Comments

  • #2
    cruizer101
    Registered Users, Registered Users 2 Posts: 3,205 ✭✭✭cruizer101


    If you can keep the same term and overpay it is better.

    You get the same advantages of paying off your mortgage earlier and less interest paid.

    But if your financial situation changes you always have the option of not overpaying. i.e. your can effectively reduce your payment with out having to renegotiate with bank.

    It gives more flexibility, that said I'm not sure the conditions around overpaying with AIB on fixed rate.



  • #3
    Sunrise_Sunset
    Registered Users, Registered Users 2 Posts: 1,215 ✭✭✭Sunrise_Sunset


    Agree with the poster above, however it's likely not an option with a fixed rate, only variable.

    I don't know what variable rates banks are currently offering.

    I've heard a few QFA's recommending clients to now lock in a fixed rate for as long as they can. This is not the advice they would have given a year ago, but things have changed a lot in that time.

    Personally I would lock in a fixed rate for a minimum of 5 years if I could.



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