So with regards putting 50k against the mortgage its looking like a 14k interest saving and around 6 years. Of course thats also the 1080 a month payment is it? So 70k in payments and 14k interest? Or have I read that incorrectly?
Sadly its a little more complicated than that.
A 144,000 mortgage will cost you 180,925 over a 15 year duration @3.15% => interest cost = 36,925
A 144,000 mortgage where you make a once off over payment of 50k immediately will cost you 158,197 over a 15 year duration @3.15% => interest cost = 14,925. This assumes you continue to pay your normal repayment amount, and the mortgage finishes roughly 6 years earlier - so it becomes a 9 year mortgage.
This is because if you continue to pay the same amount, more is coming off the principal as the interest bill each month is reduced.
It is impossible to get a guaranteed return of 3.15% after tax anywhere else. That is why overpaying the mortgage is the best thing to do strategically once you have sufficient funds in a cash reserve. *caveat on pension fund as well that needs to be considered*
Interesting with regards the Quinn life funds. The money that is in there is recovering from a big crash in the bad time! I don't pay into it. I just let it grow. It currently will pay tax on 1100 euro. Do you think I'm as well to take that too and dump it against the mortgage?
Given you will pay 41% EXIT tax on any profits you make from this point onwards, to achieve a 3.15% after tax return you would need to be making 5.5% before tax each and every year. I think this may be achievable, but will take a level of risk to do so. That risk could also see you drop by 10% or 20% again at some point.
My quick calculation (based on an online utility around mortgage over payments) shows if you were to pay another 10k off the mortgage, it would mean your mortgage would finish a year earlier, and reduce your overall mortgage interest bill by 3,750 roughly. This is a guaranteed return.
>>A 144,000 mortgage where you make a once off over payment of 60k immediately will cost you 155,174 over a 15 year duration @3.15% => interest cost = 11,174. This assumes you continue to pay your normal repayment amount, and the mortgage finishes roughly 7 years earlier - so it becomes a 8 year mortgage.
I had the same conversation on here a while back. I encashed investments I had and paid it against the mortgage for the exact same reason. See the thread below
http://www.askaboutmoney.com/threads/financial-resolutions-for-the-new-year.201887/
One other thing, house mort, LTV with KBC is 3% at the moment. That would reduce payments further. Think its worth a move. TBH I haven't looked at switching fees but I just seen the offer and the mortgage is less than 50% LTV.
144k @3.15% for 15 years would cost you 180,925
144k @3% for 15 years would cost you 178,979
It works out at 2k in total over a 15 year period. If you get some costs associated with switching, then I would consider it. If you don't then I dont believe it would be worth your while. If you pay 50k off the mortgage these figures become less attractive.
You also need a KBC current account to get those rates and you may end up paying fees on that (in certain circumstances) so keep that in mind.
Also, KBC historically have not passed on interest rate cuts to customers. They have an exception currently but not sure how long it will last. It is something to be wary of. I am not sure about your current bank and their previous history here
*please note who knows what banks will do regarding interest rates in the future and who will be more competitive in 1 years time*
Despite the fact I believe everyone should switch if they can get a better deal, I am not sure the benefits for you personally makes it a good option. I think you need to consider the numbers - saving about 150 euro a year and make a decision from there.