which mortgage loan to repay

3

3ps

Registered User
Messages
32
Hello,

I have a home mortgage.
Let's say it's worth 130,000 with 28 years at 4%.

I topped up a few years ago.
30,000 with 20 years at 4%

I had another top up too!
25,000 with 10 years at 4%.

I'm not under pressure with payments etc.

I recently got 10,000 and I want to repay towards "the mortgage".

Am I right in thinking that even though all the above are at the same rate that I should pay off the longer one... and save more in the process?

Unless I wanted to reduce my monthly payments instead in which case I should try to clear the shorter one?

Thanks!



edit:
I can't get my head around this!

using jeacle.ie:

25,000 at 4% over 10 years = Total interest of 5375

add a 1 time prepayment of 10,000 after month 2 = Total interest of 1780 "saving" 3590

In my mind I'm spending 10,000 in order to save 3590. huh???
Why not just keep my 10,000 and let the mortgage rise by 3590???

I'm sure I'm picking something up wrong....
 
The point is that the 3590 is a saving. In your head you think you're paying 10k out, but in fact, you're repaying it and will have to do so, whether it's now or later. If you do it now, you save 3590.
 
I think this is your mistake...

Without 10k payment, total repayments will be 25k + 5375 = €30,375.

With 10k prepayment, total repayments will be €10k prepayment + €15k remaining capital repayments + 1780 = €26,780.

The saving you point out is in the interest portion alone. The 25k has to be repaid regardless. You'll shorten the term of the loan also if you maintain the same monthly repayment (maybe this is where you missed your 10k?).
 
in that case I should repay towards the loan with the largest amount and longest term to get most bang for the buck, as long as I am OK to keep monthly repayments as they are?
 
Why not do a fees free remortgage onto a good tracker, consolidate them all into an overall shorter term and reduce the debt by €10,000 at the same time?

Sarah

www.rea.ie
 
Sarah,

I'm already on the BoS tracker at the moment, which I think it a good rate. I think I'm on 4% now with the recent increases... or perhaps it's not 4.25.

With one loan at 10 years and one at 20 years.... and the main one at 30 years.... I think remortgaging to any period would increase my overall payments.... the bulk is at 30 years I dont' want the monthly payments to go too high... e.g. brining the whole lot to 20 years.

Or can you suggest something else?
 
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