Should we clear mortgage?

DLD

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We currently have a remaining mortgage of approx €20k, which will be paid off in just over 2 years if we continue as normal.

However, we are in the fortunate position of having savings of €36k, and have been contemplating paying it off now to save on the couple of years of annual interest, which would easily subsidise a family holiday or do some work to the house.

We both work full time, young family, no other major debts/loans.

At the moment its maybe psychological that it would make such a dent in our savings, but would it be the sensible thing to do, since we would still have some savings for unforeseen circumstances, plus we would have that mortgage payment now free every month?

What would you do?
 
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Personally, I'd pay it off. You'll be mortgage free and still have €16k in the kitty .... a good place to be!
 
What would you do?

If you are on a standard variable rate, I would pay it off.

You probably are also paying a mortgage protection policy which could then be cancelled, making further savings.
 
Do you have any major expenditure planned in the next couple of years. I wouldn't be so quick to pay it off as having credit can be useful. In addition it is a form of saving, and it keeps you from being tempted to spend it rather than pay down the mortgage.
 
Thanks for all the replies.
An interesting thread too Brendan.

Think what we will probably do is to pay maybe half of it off by lump sum, then pay the remainder monthly as normal until its cleared.
Best of both worlds.
 
After a few more overpayments, we can see the end of our mortgage term in sight, but I was wondering what will happen when it comes down to the last couple of months payments?

Do I need to employ the services of a solicitor again?
Will the bank contact me re: the deeds?
Is there anything out of the ordinary that happens when a mortgage finishes?
 
No you don't need a solicitor. The bank will usually contact you to ask about the deeds. Nothing out of the ordinary, you just need somewhere safe to keep the deeds :)
 
If tracker do not pay it off - cheap money.
If svr mortgage - pay it off, you have given enough money in interest to the bank.
If fixed - wait to end of fixed term.
If set off - do not pay it off.
 
If tracker do not pay it off - cheap money.

That's a bit simplistic.

The better way to look at this decision is whether a better interest rate (after fees, DIRT and PRSI, where applicable) is available on an instant access deposit account than the applicable mortgage rate (after deducting any available mortgage interest relief).

Sure, a borrower could invest any available cash in equities, real estate or longer dated fixed income instruments but those investments all carry higher risks so it's not an apples-to-apples comparison.

The average tracker rate is now around 1% but there is no instant access deposit account currently available in the Irish market that would yield 1% or more after DIRT, etc. Accordingly, in most cases it is perfectly logical to use available cash to clear a tracker mortgage on a PDH.

This obviously assumes that a borrower will retain appropriate cash reserves after paying off the mortgage to meet emergencies. The conventional advice is to retain accessible cash reserves equal to between 3 and 6 months of normal household expenses.
 
DLD,

Post office saving certificates offer an aer rate of over 1% with no dirt, the decision depends if you want immediate access to you monies and also depends on your particular situation and your risk appetite. I totally agree with the poster Sarenco about leaving some available cash for emergencies, this is good advice.
 
4-year State Savings Bonds carry a tax-free yield equivalent to 0.99% AER. The principal invested is accessible on giving 7 days notice, subject to interest penalties.

Any fixed term deposit or bond carries term risk - the risk that inflation and interest rates will rise during the term of the instrument.

The only rate that is appropriate to compare to the rate on variable rate mortgage (including a tracker) is the rate on an instantly accessible deposit (or a short term money market instrument). The rate on any other fixed interest instrument is simply not comparing like with like. And that ignores default risk, however remote.
 
yes, it does, but how about the prospect of deflation within the eurozone ( a real prospect ). There are two sides to every argument.
 
Folks,

Thanks for the recent input, but its not really relevant to me as it stands, I only re-activated the thread to ask about how to deal with the deeds handover and if I'd need a solicitor involved again?

I appreciate all the info re: weighing up whether paying off mortgage is better than returns from savings, but I've currently under 6k left on the debt, and I won't have to worry about the mortgage soon enough!

But I will have to start looking at the best place to put money now as I should have some more going into savings every month.
 
Your welcome DLD

To Sarenco,

Any fixed rate deposit or bond of course.
 
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Huh? I really don't know what you are talking about.

Are you saying that an intermediate term deposit might out perform a short term deposit? Of course it might. Or it might not. That's called term risk.

You can only compare fixed income investments with the same term and default risk if you want to compare like with like. The same applies to discharging a debt or making a deposit.
 
So, an old thread but I now have another question re: clearing my mortgage.

All done, and went to sign for the deeds of the house the other day. Got a big brown envelope full of copies of legal documents. A lot of these I had seen before, signing them with my solicitor at the time of purchase.

Also plenty of documents re: land registry and the sellers details.

But is that what the 'deeds' actually are, a pile of copies of legal documents? I assumed therr would have been one official document that said I owned the property?

No?
 
But is that what the 'deeds' actually are, a pile of copies of legal documents? I assumed therr would have been one official document that said I owned the property?
The title could be registered in which instance the original deed of conveyance of the property to you would be held by the Land Registry. You should see reference to a Folio number on the documentation of this is the case and you can check the Land Cert details on the Land Registry site.
If title is Unregistered the original deed of conveyance should be with the documentation. Check for a "Schedule of Documents" which is a listing of all documents in the "chain of title". In practice your solicitor should examine the deeds received to ensure that they are all present and correct. A missing document could cause all sorts of problems in the case of Unregistered Land.
 
Yeah I can see a folio number ok.

Ill check out the land registry site.

Thanks
 
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