35000-pay into mortgage or fixed term account?

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Boi

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hi everyone,
I have 39K in my current account.I want to use it wisely.currently have mortgage with bank of ireland-about 281K.i talked to mortgage advisor in the bank re paying lump sum into my mortgage but he instead advised me to put money into their 18month account offering 8 % interest.should i listen to him?or would it be better reducing my mortgage?I am just worried if i put this money into mortgage its more like putting all my eggs into one basket?what do people think?
ps, i am already overpaying my mortgage by about 250 euro every month.
i also have regular saver accounts with halifax and first active.
 
What interest rate are you paying on the mortgage? If you can get a better return by repaying instead of putting the money in the best available savings account it may be a runner. You could probably get a better return by opening up more regular savers and drip feeding the 39k into them from a lump sum savings account.

Given that you seem to be a good saver I'd recommend the lump and drip approach with an extra big mortgage repayment when the savings accounts no longer offer better value.
 
My mortgage interest is tracker= .75% above ECB.I think it is 4% at the moment.My income is secure.hopefully I wont loose my Job:)
 
Savings is the way to go then unless you place a value on the psychological boost of seeing a big chunk come off the mortgage or don't want the hassle of managing more savings accounts.
 
GeneralZod said:
Savings is the way to go then unless you place a value on the psychological boost of seeing a big chunk come off the mortgage or don't want the hassle of managing more savings accounts.
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Thanks for the response.Can I ask you why you think savings would be better?I thought I will reduce interest paid if i put it in to mortgage?
 
Boi said:
Can I ask you why you think savings would be better?I thought I will reduce interest paid if i put it in to mortgage?
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You could repay an extra €1000 and it saves you €32 per year in interest after mortgage interest relief. Putting the same €1000 into a regular saver account might earn you €53 per year after taxes.

As long as you use the money you have in the savings accounts to repay the mortgage you don't lose out by deferring the repayment.
 
oh,thats a very interesting way of looking at it.good to know that.thanks a lot for advise-savings then:)
 
Agree with all that is said that saving could be the best way to go. Word of advice though.... I would guess that the 8% is for the 18 months - therefore the interest is really only (approx calculation 8/18*12 - not taking compound interest into account) 5.33%
 
Galway99 said:
Agree with all that is said that saving could be the best way to go. Word of advice though.... I would guess that the 8% is for the 18 months - therefore the interest is really only (approx calculation 8/18*12 - not taking compound interest into account) 5.33%
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What about DIRT?
 
I know you say that your job is secure, but just in case, it is better to have some cash around in these times. If you were to lose your job, this would allow you to continue to pay your mortgage for a few months, whereas if you paid it off your mortgage, and lost your job. the bank would be hounding you for repayments.
 
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