Injecting lump sum into Mortgage.

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Echelle15

Registered User
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If i were to inject a lump sum, say 50000, into my mortgage, is there a formula/calculation of what the effect would be either to monthly payments over the original 20 years mortgage period or if I was to reduce the loan period?
Hope my query is clear.
 
Echelle15 said:
If i were to inject a lump sum, say 50000, into my mortgage, is there a formula/calculation of what the effect would be either to monthly payments over the original 20 years mortgage period or if I was to reduce the loan period?
Hope my query is clear.
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I'm no expert but I think it would be crazy to inject your own money into your mortgage. Would you not be better getting an offset mortgage which will save you paying the interest and yet will still give you access to your money. The othe important thing to remember, and not trying to be morbit, but if you our your partner, (assuming you have one), die for some reason then the mortgage will be paid off. By paying 50k off it now you could be doing your nearest and dearest out of a decent inheritance.
 
Uuuh Patsy said:
I'm no expert but I think it would be crazy to inject your own money into your mortgage. Would you not be better getting an offset mortgage which will save you paying the interest and yet will still give you access to your money. The othe important thing to remember, and not trying to be morbit, but if you our your partner, (assuming you have one), die for some reason then the mortgage will be paid off. By paying 50k off it now you could be doing your nearest and dearest out of a decent inheritance.
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Off set only work you you are a large percentage of the mortgage saved.

As for partner dying I would say that the statistics are against that...
 
Is 50k is likely to be a big enough percantage? What percentage do you think would be the crossover point where it becomes better to offset ?
 
Don't know, am sure it can all be worked out with Karl Jeacle's mortgage calculator as pointed out. Am sure with a spread sheet and the interest rate it could be calculated, am sure that the OP would be better off with a competive tracker thanks to a good LTV than a 50k offset.
 
Can I ask a question which is of interest to me

Now that you will pay off a lump sum from the Mortgage, is there an easy way to get the money back i.e if in 6 months time, you run into a few financial problems i.e. lose your job, can you go to the bank and get your lump sum back ?

Or will the bank put you through all the grief of re-mortgaging, requiring a solicitor, proof of income (which will be difficult if you are unemployed), and a 300 or 400 euro fee, and an estate agent valuation ?
 
comanche said:
Unless you have a lump sum which makes up a large percentage of the mortgage you are best off to actually pay the lump off the mortgage rather than offset ...
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You seem to be saying there are times when an offset would be better than paying it off - if the lump sum is large ? Or have you changed your mind now?
comanche said:
...am sure that the OP would be better off with a competive tracker thanks to a good LTV than a 50k offset.
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Uuuh Patsy said:
I'm no expert but I think it would be crazy to inject your own money into your mortgage. Would you not be better getting an offset mortgage which will save you paying the interest and yet will still give you access to your money. The othe important thing to remember, and not trying to be morbit, but if you our your partner, (assuming you have one), die for some reason then the mortgage will be paid off. By paying 50k off it now you could be doing your nearest and dearest out of a decent inheritance.
Click to expand...

My mortgage protection policy covers let’s say €100K from day one, reducing in accordance with a 20 year table which accompanies the policy.

If I chose to pay €50K off the mortgage and died after six years, the policy would pay the original amount multiplied by .856 as per the table. (€100K originally would pay €85.6K), regardless of how much we owed the bank.

As the banks interest is noted on the policy, they would get what they are owed and the balance approx €50K would go to spouse, as we did not reduce the cover and continued paying the original premium.

I’m open to correction but that’s my understanding and if correct, the O/P’s spouse/partner/family would not be at a loss financially anyway by €50K having been paid off the mortgage.
 
irishlinks said:
You seem to be saying there are times when an offset would be better than paying it off - if the lump sum is large ? Or have you changed your mind now?
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Are you trolling or what's the story? Do you have anything to add?

My point is that you will get a much better interest rate by having a better LTV, rather than having a lump sum sitting in a bank account offsetting a mortgage.

Offset mortgages rarely have the most competitive interest rates.

If the OP was to opt for an offset mortgage then by having as large an offset as possible then the difference the less competitive interest rate is not as costly ... i.e. if there is a difference of 1% between the best tracker and the offset rate the cost of this is much greater on a balance of 300k rather than 100k .
 
No need for the T word, everyone is entitled to their opinion.
 
Comanche - I was just trying to get you to explain what you meant . I agree with you - that Offset Mortgages are usually higher rates than most other tracker mortgages and therefore it is usually more "profitable" to bring down the capital owing and get a better rate.
Offsetting may be the best option for someone who knows they need the lump sum for something specific in a few years time - it will normally be easier to access it from an Offset mortgage .
 
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