Thanks for this. I would have probably gone ahead and started overpaying also, but have learned a lot from your advice.Take as large a mortgage out as you can afford if you know you are going to need the cash saved for large expenses (renovations etc) in the short to medium term.
This may not mathematically be the best financial option but from a practical perspective it will give you greater flexibility. I was in a similar position and I chose to overpay my mortgage with a lump sum and then get an equity release to fund renovations. Trying to get the equity release from the bank was far more stressful than the actual renovation, and we almost walked away from the renovation. I (naively) assumed that if I gave the bank 100k there would be no issue getting the 100k back from an equity release.
The house will likely need renovations of about 200,000 euro in the years to come.
we will need plenty of cash for renovations, weddings, business ventures in the years to come?
I was in a similar position and I chose to overpay my mortgage with a lump sum and then get an equity release to fund renovations. Trying to get the equity release from the bank was far more stressful than the actual renovation, and we almost walked away from the renovation. I (naively) assumed that if I gave the bank 100k there would be no issue getting the 100k back from an equity release.
This is very annoying.
Banks should be more flexible but for some reason they are not.
Now it may be unique to BoI but they treated an Equity Release as a fresh mortgage application,
But at least that is better than Avant who just don't do top-ups.
I wonder if there is some regulatory problem?
Brendan
The rationale for borrowing the maximum amount is that other kinds of borrowings are at far higher rates than you'll pay for mortgage borrowing - in other words if you want to put just 50k down on the house you'll get a far better borrowing rate than if you put 190k on the deposit and just borrow 250k, but if you borrow minimum pay the max deposit, then have to borrow for say, a car, the car loan will be at 10% rather than 4-5% mortgage rates?Hello
Just a question here as we prepare to take out our mortgage, I appreciate that the answer would depend on one's particular financial situation.
We have gone sale agreed on a house for 445,000euro, and we have a 200,000 euro deposit saved, and mortgage approval for up to 420,000 euro(Avant 4.1% 5 Year fixed). The house will likely need renovations of about 200,000 euro in the years to come.
Should I tell the broker that we would still like to loan as much as possible, as this is the cheapest loan we will ever get, and we will need plenty of cash for renovations, weddings, business ventures in the years to come? Does this make sense?
If we are doing okay financially then we can make over payments, (within the limits to avoid penalties) each year to reduce our mortgage term if we have the money to do this? Would this make sense to you guys?
Thanks,
Jack
That's why I suggest going halfway - rather than holding onto say 145k of the 200k saved, put 100k down as a deposit - this way the repayment is 300 euro less, they'll still get a a very good rate, but they will have 90k left over for repairs and 300 euro a month more to cover other eventualities in the event that the 90k runs out.I agree that getting a loan of the most you are allowed can be a good idea.
Unless the repayment is so high that you are very squeezed every month and then end up topping up with savings.
What percent of your take home pay will the mortgage payment represent?
If you are planning kids then you'd have to consider possible loss of some wages and/or childcare fees of 1k a month at some time in the future.
So paint a picture of that happening and see how you'd manage.
PTSB were still doing this in mid 2022 when I took out my mortgage, and I think from talking to friends still buying and talking to them they still operate the same way. So the OP would still have the option of making a massive overpayment if they change their mind.They have a unique facility in that any overpayments are treated as credits on your mortgage account. You can't withdraw the money but you can take a mortgage break and use up the credits. So if you have overpaid by €120k and your mortgage payment is €2k a month, you don't have to make any mortgage payments for 5 years. Check the contract to make sure that this still applies.
Yet again I have to point out that looking at repayments is the wrong way to approach it.00k over 30 years at the best available rate is €1,829 per month
255k over same term would be €1,166 per month
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