Should I pay a lump sum off mortgage?

PatrickSponge

Registered User
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I have a mortgage of 139K, I have 13 years left on it. I comfortably pay €1008 a month

My lender allows up to 10% to be paid off in a lump sum every calendar year. I can pay off just over 14K if I so wish without penalty. I have around 50k in savings that isn't really doing anything.

Should I do it?

Thanks for any advice.
 
You may get a better return elsewhere so
After DIRT?

Also, it’s the weighted average rate over the term of the mortgage that matters. The OP has a very good fixed-rate at the moment but who knows what rates will be available after the fixed-term period.

Personally, I would pay down the mortgage ahead of schedule.
 
My lender allows up to 10% to be paid off in a lump sum every calendar year
Firstly your lender doesn't stop you overpaying so I wouldn't limit the decision to just 10%

The second question is should you.

Thanks, rate is fixed at 2.25% for the next 6 years.

Based on your mortgage rate and prevailing deposit rates my first thought is no. You should save and and overpay when your fixed rate is up/deposit rates drop below 3.36% (pre-dirt break even rate assuming interest paid is less than €5k).

You can just about get better rates if you lock in for 2 years. It's marginal so would depend on the amounts you're talking about. It wouldn't pay for any longer.

There are higher variable rates. You could consider these but given they are not fixed you'd need to monitor them regularly.


Have a look at the following post it might help you decide

 
Firstly your lender doesn't stop you overpaying so I wouldn't limit the decision to just 10%

The second question is should you.



Based on your mortgage rate and prevailing deposit rates my first thought is no. You should save and and overpay when your fixed rate is up/deposit rates drop below 3.36% (pre-dirt break even rate assuming interest paid is less than €5k).

You can just about get better rates if you lock in for 2 years. It's marginal so would depend on the amounts you're talking about. It wouldn't pay for any longer.

There are higher variable rates. You could consider these but given they are not fixed you'd need to monitor them regularly.


Have a look at the following post it might help you decide

What would you thoughts be on Trading 212 and their rate of 4.2%?
 
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