I realise the topic of paying lumpsums off a mortgage has come up quite a lot recently, and I think I have read nearly all of them and learned a lot.
I posted previously about being in a fairly sizeable amount of negative equity (I do want to sell in the near future so it is an issue for me, however I don't think it will be achievable for quite a few years to come). Since my last post my estimate of how large the shortfall is has increased quite a lot, between the few apartment sales in the area, and also now that NAMA is proposing to sell apartments in our postcode and offer a 5-year guarantee against a drop in value.
So, I have been saving for a few years and have €22k set aside - in my ideal world this would have been my house deposit. As it is extremely unlikely I will be able to carry the negative amount to a new property, or make any deal with the bank, I feel the best option is to pay most of this amount off the outstanding mortgage (€177k).
My questions for you are:
1- how much of this €22k would it be recommended to set against the capital? i.e. how much ideally should a person keep as a 'rainyday fund'
2- if it does become possible for me to go for a mortgage in the next approx 2 years and a bank asks to see my savings history, will they accept that my savings are low because I paid lumps off the mortgage? Or would they be likely to penalise me and treat me like I was a big-spender... as if I had spent it all on shoes & handbags!
3- is there any point in holding out hope that the banks will allow a transfer of negative equity in the future, and therefore hold onto my savings for now?
My savings don't earn a lot of interest and I currently pay nearly 5% mortgage interest. Using them to pay down the mortgage seems like the sensible option but then again I was also brought up on the idea that "rent is dead money".
Any help would be appreciated.
I posted previously about being in a fairly sizeable amount of negative equity (I do want to sell in the near future so it is an issue for me, however I don't think it will be achievable for quite a few years to come). Since my last post my estimate of how large the shortfall is has increased quite a lot, between the few apartment sales in the area, and also now that NAMA is proposing to sell apartments in our postcode and offer a 5-year guarantee against a drop in value.
So, I have been saving for a few years and have €22k set aside - in my ideal world this would have been my house deposit. As it is extremely unlikely I will be able to carry the negative amount to a new property, or make any deal with the bank, I feel the best option is to pay most of this amount off the outstanding mortgage (€177k).
My questions for you are:
1- how much of this €22k would it be recommended to set against the capital? i.e. how much ideally should a person keep as a 'rainyday fund'
2- if it does become possible for me to go for a mortgage in the next approx 2 years and a bank asks to see my savings history, will they accept that my savings are low because I paid lumps off the mortgage? Or would they be likely to penalise me and treat me like I was a big-spender... as if I had spent it all on shoes & handbags!
3- is there any point in holding out hope that the banks will allow a transfer of negative equity in the future, and therefore hold onto my savings for now?
My savings don't earn a lot of interest and I currently pay nearly 5% mortgage interest. Using them to pay down the mortgage seems like the sensible option but then again I was also brought up on the idea that "rent is dead money".
Any help would be appreciated.
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