Advice on paying lumpsum off mortgage or save

B

bluetoo

Guest
I am looking for advice.
I was made redundant a year and a half ago after 12 years with a company, receiving a large 5 figure package.
My mortage was fixed until last month and i am now back on a tracker. My quandry is what should i do? I have
the money lodged in 2 differnet savings accounts in BOI and AIB. Should i pay it off my mortage, knocking to less
than half of the current amount or should i keep it as savings, as cash is king and who knows what will come?
As an aside i have since been working on a contract basis, been kept on short term contracts with no security, but
at the sametime i don't think i will be let go at the end of contract in sept and my wife is in a secure job.
 
hi bluetoo... you might get more responses if you posted figures..
redunancy amount / mortgage amount / tracker rate / years remaining

you might also google 'mortgage calculators' which will show you how much interest you could save by paying it off V saving it
 
Hi,
Yes i have done this and see the savings on that side. I partly have held off to see if BOI will offer the same deal as Irish Permanent for people paying off tracker mortgages and then who knows what will happen next in the comedy that is the Irish Banking industry.
Current figures are
Loan approx 160,000
Savings approx 80,000
Tracker rate i think is plus 1.5%
Mortage left 15 years
 
Keep at least a good sized emergency fund, maybe around a year's worth of your family's living expenses, as your job is not very secure.

You can hold on to the remainder for a while, to see if you get any discount on paying a lump sum off your mortgage. If you do, it may be worthwhile to pay it off the mortgage (keeping the emergency fund).

If you don't get a good deal from BOI within, say, the next 6 months, you can consider then what's best for you.
 
Pay off mortgage verses savings

bluetoo said:
Hi,
Yes i have done this and see the savings on that side. I partly have held off to see if BOI will offer the same deal as Irish Permanent for people paying off tracker mortgages and then who knows what will happen next in the comedy that is the Irish Banking industry.
Current figures are
Loan approx 160,000
Savings approx 80,000
Tracker rate i think is plus 1.5%
Mortage left 15 years
Click to expand...

Hi Bluetoo,

I would strongly recommend not paying off your mortgage at present as the cost of your mortgage (1.5%) verses an investment rate (E.g. 4%-6%) over 3-5 years far outways paying off your loan early. If you can save/invest this money rather than paying it off, you will have; (1) An Emergency Fund, (2) Still keep the option of pay off your mortgage at a later date, and (3) Potential growth on this lump sum, (4) Access to money at any time, which is vital in todays economy.

Make sure to speak to an independant financial adviser, and not just one or two banks/insurance companies. There are quite good savings and investment opportunities at present that you can avail of in the market.

Hope this helps
 
What are people's thoughts as to whether banks will offer incentives for customers to pay off lump sums from their trackers but without forcing the customers onot fixed rates for the remainder of their mortgage?

My other half will prob be looking at redundancy in the next few months but, like the OP, would be in line for a substantial 5 figure package. If he finds employment on a similar salary package within a 6 - 9 month period, we could use the money to pay off some of our mortgage (I reckon roughly 20 - 25% of the balance remaining). We'd only do it if we could keep our tracker. We are not in mortgage arrears and, although probably in NE, not by much more than 10 - 15% I would think.

Any thoughts?
 
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