pay more on mortgage OR save OR what?

G

Gordanus

Registered User
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686
Age: 50
Spouse’s/Partner's age: n/a

Annual gross income from employment or profession: c.€60,000
Annual gross income of spouse: n/a

Type of employment: e.g. Civil Servant, self-employed: p/t employed (secure) and p/t self-employed (half & half)

In general are you:
(a) spending more than you earn, NO
or
(b) saving? Not really, enough in bank to pay tax when due and a bit over....

Rough estimate of value of home: €380,000 - not in NE, but worth less than I bought it for.
Amount outstanding on your mortgage: €355,000
What interest rate are you paying? VARIABLE

Other borrowings – car loans/personal loans etc: NONE - but borrowed 15K from family member to help with mortgage, repaying at 400pm at present, could pay more.

Do you pay off your full credit card balance each month? YES
If not, what is the balance on your credit card?

Savings and investments: NO investments, have about €16K in bank, which has to pay for some urgent home maintence -mostly complete & paid for now, about 1K will cover rest -and tax due - could be about 8K in October next.

Do you have a pension scheme? YES

Do you own any investment or other property? Only family home

Ages of children: 15 (one child)

Life insurance: YES


What specific question do you have or what issues are of concern to you?

At present, with the interest rates so low, I'm managing to pay back the mortgage fine and could increase my repayments. I was just wondering would I be better off:

A) upping my mortgage repayments (mortgage goes till I'm 75 due to being s/e) to reduce the term of the morgage.

B) paying off my parents....I didn't really need their loan but they insisted, and I took it as a just-in-case; it'll take just over 3 yrs to pay off at the rate I am now. But they are elderly and I'd like to put a lump sum towards it. I hate owing money, and would rather have borrowed a bit more from the bank. (I'd rather owe the bank than family/friends.)

C) or should I put my surplus into a savings account? (Seeing that college fees will be coming back)
 
Hi, if I were you I'd pay back my parents. Then at least you'll have peace of mind as it seems like it's bothering you.
If not I'd increase my mortgage repayments. Myself and my husband are currently doing that and we have reduced our mortgage by 2 yrs. (of course tht's providing int. rated stay the same!) And that's only by incresing our repayments by a little. We intend to increase them again next month. Might as well avail of low interest rates while they last. By the way BOI have a calculator on their website where you can calculate how many years, how much interest you will save by increasing your repayments. I found it really useful.
Good luck
 
You mention savings of 16k but I presume you have none left after a recent piece of renovation and a subsequent tax liability. So assuming you have none I would try to save a rainy day fund of about 6 months outlays. I would continue paying your parents at the same rate currently as like a lot of people they may be worried about savings at the minute and would rather know they are getting their money from you rather than relying on banks (I dont think money in the bank is unsafe just some people can over-react).
 
Since you are on a variable rate, I would consider moving to a fixed rate (at least get provisional information from your mortgage provider about what fixed rates they would provide you). Interest rates may start to rise within the next six months/year. Certainly banks themselves can raise variable rates at their whim. ECB is expected to increase it's rates late in 2009 - 2010 to counter inflationary pressures.

Again having an emergency fund is very important for peace of mind if nothing else: 3 months to 6 months is recommended, but any emergency fund is important.
 
Thanks all. I'll see about increasing both repayments to parents and towards the mortgage, and keep the savings as they are. Many thanks G
 
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