Lump Sum off Mortgage before or after fixing?

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eyesgreen_1

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I’m just about to pay a lump sum off my mortgage with BOI. I recently came off my fixed rate of 2.9% onto a variable of 3.9%. I will probably fix again for one year at 2.9% again. Mortgage balance is €47000 with 10 years left. I have two questions:

  1. Does it have any financial bearing wether I pay the lump sum off during the present variable rate period of 3.9% or during a fixed period of 2.9%? (Any break fee would be usually very small).
  2. Does it have any financial bearing wether I pay it off now in December or for example January?
Kind thanks for any advice.
 
Last edited:
Pay it off during the variable period.
It's straightforward and no break fees of any sort.

The sooner you pay it off, the sooner they will stop charging you interest on the amount you pay off.

For example, if you pay off €10,000 at 2.9%, you will saver yourself €290 a year or €24 a month.

Brendan
 
If you pay off €7,000 , you will have a balance of €40,000

If you switch to another lender at 1.9% instead of 2.9%, you will save €400 a year.
But this will reduce as you are paying down the capital quickly.

So it's not worthwhile switching as it would cost about €1,500 and other lenders probably wouldn't take a €40,000 mortgage over 10 years.

So you are a prisoner of BoI's very high rates for existing customers. You are paying for the cashback they give to new customers.

Brendan
 
Brendan Burgess said:
Pay it off during the variable period.
It's straightforward and no break fees of any sort.

The sooner you pay it off, the sooner they will stop charging you interest on the amount you pay off.

For example, if you pay off €10,000 at 2.9%, you will saver yourself €290 a year or €24 a month
Click to expand...
Thanks a lot Brendan, that makes sense. Just wanted to double check. I agree on your summation of switching, I am indeed a prisoner of BOI, also I wouldn’t be in a decent position to switch anyway due to intermittent income and the pandemic situation. So I’ll just keep knocking what I can off this mortgage. Thanks again.
 
Gordon Geko - I’m not financially in a position to change due to intermittent income so very unlikely a bank would entertain a switch. Also, as Brendan pointed out I don’t think such a small mortgage would be of much interest to another bank, so I am pretty much a BOI prisoner at present anyway.
 
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