Nowronganswer
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Always reduce the monthly payment. This gives you more flexibility with your finances. It is good practice to overpay your mortgage but as your situation changes (e.g. if kids come along) it is much better to have a smaller minimum payment that you are obliged to pay. You then have the choice to overpay or use the difference for living expenses/pension contributionsIs it best to reduce term or reduce monthly amount?
In general yes. There may be situations where you can extend it again but for a straight switch, it is easier for everything to stay the same so if you reduce the term now, then the new reduced term is what you will use for switchingIf I had elected to reduce the term then does that reduce term carryover to the new lender?
Always reduce the monthly payment. This gives you more flexibility with your finances. It is good practice to overpay your mortgage but as your situation changes (e.g. if kids come along) it is much better to have a smaller minimum payment that you are obliged to pay. You then have the choice to overpay or use the difference for living expenses/pension contributions
In general yes. There may be situations where you can extend it again but for a straight switch, it is easier for everything to stay the same so if you reduce the term now, then the new reduced term is what you will use for switching
If you are overpaying by €300/month, then you are on course to reach an 80% LTV after 2 years. Even though you have fixed for 3, you should be checking what the break fees are as you approach 80% LTV and consider switching to a better rate if the break fee is small or zero. Going with PTSB was fine because of the 2% cashback but be careful not to get stuck at those rates. Again, if you are to have kids, your affordability may change in the next 3 years so you may not have the option to switch. It would be better to be on a low interest rate (lots in the 2.2% range at LTV) rather than relying on cashback. So target 80% LTV as soon as reasonably possible and switch
Use this calculator to play around with scenarios
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There is no difference, so long as you are repaying the same amount per month.What are the interest savings gains between overpaying to reduce term and overpaying to reduce monthly repayments.
It would be fully paid off in 20 years.Pay it as if it were a 20year mortgage.
My question is.. does that mean you still repay it over 35 years and have the interest payed off in 20 years or will the whole mortgage be paid off in 20 years???
Overpaying will reduce the term. If you make it all the way to the end without running into financial difficulty both approaches are the same i.e., mortgage paid off in 20 years.Hi red onion. You say it would be paid off in 20 years.
So if you take out a 35yr term and pay it as if it were a 20 year term it would be paid off in 20 years.. Are you using the overpayment to reduce the term then? which goes againsts the ""its better reduce the monthly repayment vs reducing term debate""??
You'd need exact figures to calculate it properly.I have 40 k saved up. If I pay 40k up front off the mortgage now I'm charged a break fee or early payment fee of 800e.
I could however increase my monthly payments by reducing the term and use the 40k to pay it through my monthly payments and avoid the break fee.
My monthly repayment would go from 700e to 2000e odd a month with the 40k included in the payment.
Sorry now im half confused here, i have dyslexia.Overpaying will reduce the term. If you make it all the way to the end without running into financial difficulty both approaches are the same i.e., mortgage paid off in 20 years.
The argument for leaving the term at 35 years is you are not locking in the higher repayments. €984 had to be paid while €210 is the extra bit you top it up by. This can be useful if you suffer a financial shock e.g. a pay cut. The extra 210 can be diverted elsewhere if needs be e.g. day to day living.
If you agreed to reduce the term to 20 years and at a later date wanted to use the €210 for something else you couldn't. At least not without having to go back and negotiate with the bank.
The destination is the same but one is more flexible.
I only plan to overpay for 3 years with ptsb so what happens after the 3 years.Eventually, overpayments over a period will reduce your term in either case. That simply means you are paying more monthly and therefore you pay off your mortgage early.
One way of doing that is to ask bank to reduce term of mortgage to match overpayment. However for PTSB, you don't have to do it. They keep accumulating it for you in a separate pot. As soon that pot has enough money to pay off your mortgage in lump sum, you have paid it off mortgage which will be earlier than original term..
I only plan to overpay for 3 years with ptsb so what happens after the 3 years.
Say in 3 years time before its time to switch, say we had a child and partner is scenario 1. On maternity leave
Scenario 2. Decides not return to work and become a stay at home mom.
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