lump sum off morgage query...?

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eyesgreen_1

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hi all...8 years into a 30 year morgage with bank of ireland variable rate..repayments are €397.00 per month..balance on morgage is €81,000 If I wanted to pay a lump sum lets say €10,000 off my morgage...would my repayments stay the same but the term of the morgage get shorter or would my repayments be less and term stays the same..?.or could I stipulate which I would prefer to the lender..? any advice on this would be great..thanks.
 
I'd spend the €10,000 on something else, it wouldnt even put a dent in your morgtage, to me it would just seem like a waste of money with your repayement being so little. I wish mine were that small.
 
packard said:
I'd spend the €10,000 on something else, it wouldnt even put a dent in your morgtage, to me it would just seem like a waste of money with your repayement being so little. I wish mine were that small.
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I'm just curious to know why nearly 12.5% of the total amount remaining doesn't count as a dent :) If 12% of your car disappeared over night you'd certainly consider it more than a dent!!

The "waste of money" you are talking about will knock maybe 5 years off the remaining term of the mortgage and could save them a considerable amount of interest (could be between 5 and 10k over the term - recall that they have to repay the €81000 but they need to pay maybe half again in interest over the term).
 
It isn't unkown for banks to toss a sum into a low or zero interest bearing account if you don't stipulate that it is to be paid off the mortgage account. Before you know it you have:

paid interest you didn't need to and
been getting no interest on the amount held by the bank.
 
Hi,

I also want to do this. Can somebody advise on how best to word the cover letter?

If I say I want the amount to reduce the term and not the monthly repayment is that the same as saying I want them to take it off the capital or should I ask that aswell?

Thanks.
 
Please lodge the following 1 million pennies against my mortgage account thus reducing the term on my mortgage and keeping my repayments at the same amount.
 
so-crates said:
I'm just curious to know why nearly 12.5% of the total amount remaining doesn't count as a dent :) If 12% of your car disappeared over night you'd certainly consider it more than a dent!!

The "waste of money" you are talking about will knock maybe 5 years off the remaining term of the mortgage and could save them a considerable amount of interest (could be between 5 and 10k over the term - recall that they have to repay the €81000 but they need to pay maybe half again in interest over the term).
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At the amount their paying every month they shoul get themselves a nice holiday for €10,000 and get away from this country for a while and enjo themselves
 
Also don't forget to have the instruction signed my all account holders of the mortgage, otherwise the bank could disregard it.

It is advisable the quote the exact monthy/weekly amount that you wish to remain the same.
 
packard said:
I'd spend the €10,000 on something else, it wouldnt even put a dent in your morgtage, to me it would just seem like a waste of money with your repayement being so little. I wish mine were that small.
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This is where different mindsets come into play. Some people hate having debt and would do anything possible to reduce that debt. Id wager if OP has 10k free to put against mortgage capital that they dont have other debt to worry about, and that they are probably savers too. People with this mindset get money, look at how they can improve the future with it, and if there is anything left over afterwards then great, if not - well the future has been improved.

The other mindset is the one where someone is managing your finances in a particular way, and if any extra shows up the see it as 'free' money to be enjoyed in the current moment, not as a way of improving the future, and not as a way of clearing debt. These are people who dont mind so much about having debt.

I dont know who is right or wrong btw - Im just musing about different peoples attitudes to money.

Anyway OP, I asked my bank this very question recently and was told that paying money off the capital does not in fact bring down either the repayments or the term agreed, unless you re-negotiate the mortgage (this is relevant for people who do not want to change their terms, if they have a good deal that they may not get today), but what it does do is allow you to pay off the mortgage in less time than the term allowed for.
You should also check that there are no penalties for paying a lump sum off the capital with your bank (depending on your mortgage type).
 
Since the repayments are so low, I'm wondering if the OP has calculated how much interest they would save if they changed the term to 25 or 20 years (leaving aside the €10,000 issue). Assuming of course that highter payments would be suitable.

~ how about that view to balance the view that OP should spend the 10k on fast wimmin and slow horses in the sun? ~
 
packard said:
At the amount their paying every month they shoul get themselves a nice holiday for €10,000 and get away from this country for a while and enjo themselves
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truthseeker said:
This is where different mindsets come into play. Some people hate having debt and would do anything possible to reduce that debt. Id wager if OP has 10k free to put against mortgage capital that they dont have other debt to worry about, and that they are probably savers too. People with this mindset get money, look at how they can improve the future with it, and if there is anything left over afterwards then great, if not - well the future has been improved.

The other mindset is the one where someone is managing your finances in a particular way, and if any extra shows up the see it as 'free' money to be enjoyed in the current moment, not as a way of improving the future, and not as a way of clearing debt. These are people who dont mind so much about having debt.

I dont know who is right or wrong btw - Im just musing about different peoples attitudes to money.

Anyway OP, I asked my bank this very question recently and was told that paying money off the capital does not in fact bring down either the repayments or the term agreed, unless you re-negotiate the mortgage (this is relevant for people who do not want to change their terms, if they have a good deal that they may not get today), but what it does do is allow you to pay off the mortgage in less time than the term allowed for.
You should also check that there are no penalties for paying a lump sum off the capital with your bank (depending on your mortgage type).
Click to expand...

Maybe it is all down to how much you take this story to heart in childhood!
http://www.dltk-teach.com/fables/grasshopper/mstory.htm

For me, I can't understand advising the OP to keep paying for the privilege to borrow money they don't need to keep borrowing. They can pay off part of their debt, with repayments that low they will continue to enjoy their lifestyle but be debt-free sooner.
 
eyesgreen, here's what I'd do. Keep the term the same and keep your repayments the same. If you are worried about higher interest rates fix a portion (not for too long) of the remaining loan and have the other portion on a variable. Anytime you have spare cash put it off your variable. Aim to clear the variable portion by the time the fixed rate expires and continue in this fashion. For times you may not be in a position to pay off lump sums the fact you are still keeping your repayments at a higher level still means you are making progress towards being loan free.
 
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