Over paying Mortgage.. Good or Bad Idea.

R

ryan-neil

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Hi,

I have managed to get my first mortage for an apt for 270,000K, i was saving €1500 a month, paying my parents €200 a month to live at home on top of this this left me with about €300 for the month but that's what you have to go to get on the property ladder.

Now i've got my place the mortage is only €1200 a month, a friend is renting a room for €350 a month, that means i will have €850 a month on what i had already, i was planning on over paying my mortgage to the tune of €2000 a month, i taught this would be better than placing it in a saving account with a lower rate of intrest that that of my mortgage, i have a pension and at 23 am happy with what i have going into that, already have saving's in the form of shares i buy yearly from bonus,the other half goes into pension and will be recieving a raise in March,

But anyone i asked said i should wait until the first five years are past before over paying but considering that only €350 of every payment is actually mortgage and the rest is intrest i taught this would be a good way to save a few euros as well as look good to the bank when it comes to getting a bigger place down the road.

Any advise on this would be much appreciated.
 
Congrats on getting your first property. I think that you should enjoy some of the finer things in life for a while, go wild while you still can! :)
 
As far as I'm aware you can put the extra money towards the capital portion rather than the interest. You need to state this clearly (probably best in writing) to the mortgage institution.
 
You seem to have everything well covered. If I were in your situation I would definitely put the extra toward the capital on the mortgage, especially as interest rates are rising.
 
From my reading of this, if you were to pay €2000 into your mortgage per month, this would leave you with €50 extra for yourself per month over and above what you had when living with your parents. However, you'll have to bear in mind the extra cost of not living with your parents - food, ESB, telephone/broadband... the extras all mount up. By all means, pay any extra that you have into your mortgage, but I think overpaying by €800 is a tad unrealistic:)
 
congrats on your new house.
Also do you have a fund for when soemthing goes wrong in the house?
When something goes wrong with your car ( if you have one)?

You should have at least 6 months salary in a savings account that you can get at easily, for that just incase time.
 
Hey,

You are close enough on those numbers, but those are just base (ex overtime) i will have approx €350 left per month now but i will recieve an increase in benefits of 33% this Christmas, this is guarneteed, that will cover esb, extra petrol etc easily, also bills will be split, i have been able to afford my mobile, car etc every without any issues, another question through and i have additional expenditure i can easily stop to coever other things... I already have a slush fund of just over 5k, i just bough a new (2nd hand) car that is fine, repair cars as a side line so i'm not to worried there.

Your opinion on this though, If you fix your mortgage as far as i know you cannot over pay, would you recommend over paying and staying variable or fixing and saving the extra to a RaboDirect Account, Currently 3.70%. Mortgage Rate is 4.1 for the first two years now, going to 4.5 after two years.

Thanks
 
Nortern Rock are 4%. AIB regular saver is 6% but only allowed to save 300 pm. Take a look at best buys forum before making your decision. Depending on your mortgage rate, you could make more from your money without risk in some of the accounts mentioned.
 
thanks for every ones help, spoke to the bank today and they say that any over payments are just off the capital of the loan, so i'l think i'l do that and watch my BOI 365 with intrest over the years :)
 
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