AIB Split mortgage -should I take pay capital against warehouse to get 30% discount?

[Futurelookin]

Hi,

Have been lucky enough to get an offer of a split on our lovely home. It's been pretty huge for us to get the security but I'm curious about working out the most advantageous way to take advantage of this opportunity. Unfortunately, I haven't a bean (hence the split offer) but assuming I had access to funds / loan from family or something, how would I work out the most financially beneficial way of taking advantage of the offer?

For example, If I do nothing other than keep to the terms of the agreement, I would be better off to the tune of 30ishK interest if I didn't have to pay the interest on the warehoused portion. If I take advantage of the 70/30 repayment on non warehoused portion, for 1st 5 years or 80/20 for second five years or some combination of the above 3 options is there some formula to calculate the best € result to optimise the benefit?

Thanks!

 

[Brendan Burgess]

I presume you have an AIB split mortgage?

What term is left on your mortgage?

You say it is your lovely home? Will you be staying in it forever or might you need to move or trade up or down?

You don't need to make any decision now. There is no advantage in paying money off now. Wait until just before the 5th anniversary to decide if the 70/30 repayment is worth taking. How many years will be left on your mortgage at that stage?

Lots can change in 5 years. Although you might think that this is your final home, the situation may be different in 5 years.

If things get a lot worse for you, maybe voluntary surrender and bankruptcy might be an option. You will not want to have paid off some of a loan unnecessarily if this happens.

It's very important that you stick the the revised agreement or else you could lose it. So if things are still a bit tight in 5 years' time, but you have access to a family loan, it may be better to keep it in reserve to make sure you pay your active mortgage.

Brendan

 

[Futurelookin]

I presume you have an AIB split mortgage?

What term is left on your mortgage?

You say it is your lovely home? Will you be staying in it forever or might you need to move or trade up or down?

You don't need to make any decision now. There is no advantage in paying money off now. Wait until just before the 5th anniversary to decide if the 70/30 repayment is worth taking. How many years will be left on your mortgage at that stage?

Lots can change in 5 years. Although you might think that this is your final home, the situation may be different in 5 years.


If things get a lot worse for you, maybe voluntary surrender and bankruptcy might be an option. You will not want to have paid off some of a loan unnecessarily if this happens.

It's very important that you stick the the revised agreement or else you could lose it. So if things are still a bit tight in 5 years' time, but you have access to a family loan, it may be better to keep it in reserve to make sure you pay your active mortgage.

Brendan

Hi Brendan,

There are 255 months left on loan. House is adequate for needs now and in the future and in SCD so presumably represents the best safeguard against property falls and would be easily rented. I take the point about voluntary surrender and bankruptcy and I know I need do nothing for the time being. I don't have the means anyway.

I wasn't really looking for what to do next advice - more a sort of actuarial analysis of the optimum way to repay bearing in mind that if you for e.g. pay back on the 70/30 option, your saving isn't actually 30% as you would have reduced some of the principal you wouldn't have had to pay interest on anyway etc. It's pretty complicated to work out the € amounts in terms of different repayment scenarios - hence my asking the learned on AAM!

Thanks,

F.