Equity Release needed in two years but want to overpay mortgage now

[Sybil35]

Hi I have 296k left on my mortgage and a term of 29yrs. Property is valued at 525k but we need to do major work to it in the region of 150k. My plan is to save as much as possible of this 150k over the next 2 years and get the minimum amount needed from the bank.

However I really would love to be able to over pay my current mortgage significantly and feel maybe it isn't the right decision to be saving so hard and instead put it off the mortgage? currently saving 2k a month and as I'm fixed with BOI only overpaying by 10% (127e). I am considering breaking my fixed rate (cost 800) and switching to EBS for cashback, putting a small amount (10K) on variable to overpay over a year and then switch to AIB on variable the following year and applying for top up with them. Once everything is done i'll over pay by the 2k with AIB.

Question is should I save everything for a smaller top up, save some and over pay some, or overpay as much as possible?

 

[Monbretia]

I'd save it on the basis that you never know what bank requirements for top ups/equity release may be, might not be as easy to get it as you might like so if it was me I'd prefer to have the max in cash and be looking to borrow the minimum.

 

[Brendan Burgess]

Let's look at how much you will save if you overpay your mortgage.

€2k a month for 24 months is €48k
You will have €48k off your mortgage for an average of 12 months.
So, if you are paying 4% interest, you will save about €2k in interest over the two years.
It seems a small price to pay for the flexibility of having €48k cash.

As Monbretia has pointed out, the market may be very different in two years. They may not be doing top ups and you might have to borrow the €100k from a Credit Union or other expensive lender.

There is no harm in switching, but I don't think you should switch twice and look for the top-up from the third lender.

Switch to EBS. Stay with them until the top-up is complete and then switch to AIB.

Brendan